Chapter 2 Exam Problem (50 Points) The following are preliminary financial statements for ABC Co. and XYZ Co. for the year ending December 31, 2020 prior to Black's acquisition of Blue. ABC Co. XYZ Co. Sales $360,000 $228,000 Expenses (240,000) (132,000) Net income $120.000 S 96.000 $252,000 96,000 Retained earnings, January 1, 2013 Net income (from above) Dividends paid Retained earnings, December 31, 2013 $480,000 120,000 (36.000) $564.000 $348,000 Current assets Land Building (net) Total assets $360,000 120,000 480,000 $960,000 $120,000 108,000 336,000 $564,000 Liabilities Common stock Additional paid-in capital Retained earnings, December 31,2013 Total liabilities and stockholders' equity $108,000 192,000 96,000 564,000 $960.000 $132,000 72,000 12,000 348,000 564.000 On December 31, 2020 (subsequent to the preceding statements), ABC exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of XYZ. ABC's stock on that date has a fair value of $60 per share. ABC was willing to issue 10,000 shares of stock because XYZ's land was appraised at $204,000. ABC also paid $14,000 to several attorneys and accountants who assisted in creating this combination. Required: Assuming that these two companies retained their separate legal identities, using Microsoft Excel, prepare in good form a: 1. Acquisition-Date Fair Value Allocation Schedule, 2. Journal entries for the acquisition and attorney and accountant fees, 3. Consolidation worksheet as of December 31, 2020 after the acquisition transaction is completed. Chapter 2 Exam Problem (50 Points) The following are preliminary financial statements for ABC Co. and XYZ Co. for the year ending December 31, 2020 prior to Black's acquisition of Blue. ABC Co. XYZ Co. Sales $360,000 $228,000 Expenses (240,000) (132,000) Net income $120.000 S 96.000 $252,000 96,000 Retained earnings, January 1, 2013 Net income (from above) Dividends paid Retained earnings, December 31, 2013 $480,000 120,000 (36.000) $564.000 $348,000 Current assets Land Building (net) Total assets $360,000 120,000 480,000 $960,000 $120,000 108,000 336,000 $564,000 Liabilities Common stock Additional paid-in capital Retained earnings, December 31,2013 Total liabilities and stockholders' equity $108,000 192,000 96,000 564,000 $960.000 $132,000 72,000 12,000 348,000 564.000 On December 31, 2020 (subsequent to the preceding statements), ABC exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of XYZ. ABC's stock on that date has a fair value of $60 per share. ABC was willing to issue 10,000 shares of stock because XYZ's land was appraised at $204,000. ABC also paid $14,000 to several attorneys and accountants who assisted in creating this combination. Required: Assuming that these two companies retained their separate legal identities, using Microsoft Excel, prepare in good form a: 1. Acquisition-Date Fair Value Allocation Schedule, 2. Journal entries for the acquisition and attorney and accountant fees, 3. Consolidation worksheet as of December 31, 2020 after the acquisition transaction is completed
