Check my work The balance sheet of Drake Enterprises as at December 31, Year 5, is as follows: Assets Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation 117,100 155,000 203,400 1,812,000 (912,000) $1,375,500 Liabilities and Equity Current liabilities Bonds payable Common shares (112,000 shares) Retained earnings $ 254,000 364,000 232,000 525,500 $1,375,500 Effective January 1, Year 6, Drake proposes to issue 88,500 common shares (currently trading at $23 per share) for all of the common shares of Hanson Industries. In determining the acquisition price, the management of Drake noted that Hanson Industries has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $162,000 on this unrecorded intangible asset. Direct costs associated with the acquisition were as follows: Costs of issuing shares Professional fees $ 56,000 50,500 $106,500 Check my work The balance sheet of Hanson Industries as at December 31, Year 5, is as follows: Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Fair Value $ 67,000 298,500 184,200 1,149,500 Carrying Amount $ 67,000 287,000 199,000 1,289,000 (312,000) $1,530,000 $ 149,500 111,000 672,000 597,500 $1,530,000 Current liabilities Liability for warranties Common shares Retained earnings 149,500 143,000 Hanson Industries is to be wound up after the sale, Saved Help Save & Exit Submit Check my work Required: (a) Assume that the shareholders of Hanson accept Drake's offer on the proposed date. Prepare Drake's January 1, Year 6. consolidated balance sheet after the proposed transaction occurred. (Negative amounts should be indicated by a minus sign.) Drake Enterprises Consolidated Balance Sheet January 1, Year 6 Assets $ 0 Liabilities and Equity $ 0 Check my work 3 (b) Assume that Drake is a private entity, uses ASPE, and chooses to use the equity method to account for its investment in Hanson, Prepare Drake's January 1, Year 6. balance sheet after the proposed transaction occurred. (Negative amounts should be Indicated by a minus sign.) 10 points Drake Enterprises Balance Sheet January 1, Year 6 eBook Assets Print References $ 0 Liabilities and Equity $ 0 (c) Calculate the debt-to-equity ratio under Consolidated and Equity Method. (Round your answers to 2 decimal places.) Consolidated Debt-to-equity ratio Equity Method 3 (d) Prepare Drake's consolidated balance sheet after the proposed transaction occurred using the worksheet approach. (Values in the first two columns and last column (the "parent", "subsidiary" and "consolidated" balances) that are to be deducted should be Indicated with a minus sign, while all values in the "Entry columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Leave no cells blank - be certain to enter "o" wherever required. Omit $ sign in your response.) Consolidated Pinancial statement Working Paper Drake Company Consolidated Balance Sheet January 1, Year 6 eBook Entries Consolidated Drake $ Hansen $ Dr $ ferences Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Investment in Manson Acquisition differential Cuatomer service contracts Goodwill $ $ Current liabilities Ronda payable Liability for warranties Common shares Retained earnings Total $ Check my work The balance sheet of Drake Enterprises as at December 31, Year 5, is as follows: Assets Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation 117,100 155,000 203,400 1,812,000 (912,000) $1,375,500 Liabilities and Equity Current liabilities Bonds payable Common shares (112,000 shares) Retained earnings $ 254,000 364,000 232,000 525,500 $1,375,500 Effective January 1, Year 6, Drake proposes to issue 88,500 common shares (currently trading at $23 per share) for all of the common shares of Hanson Industries. In determining the acquisition price, the management of Drake noted that Hanson Industries has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $162,000 on this unrecorded intangible asset. Direct costs associated with the acquisition were as follows: Costs of issuing shares Professional fees $ 56,000 50,500 $106,500 Check my work The balance sheet of Hanson Industries as at December 31, Year 5, is as follows: Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Fair Value $ 67,000 298,500 184,200 1,149,500 Carrying Amount $ 67,000 287,000 199,000 1,289,000 (312,000) $1,530,000 $ 149,500 111,000 672,000 597,500 $1,530,000 Current liabilities Liability for warranties Common shares Retained earnings 149,500 143,000 Hanson Industries is to be wound up after the sale, Saved Help Save & Exit Submit Check my work Required: (a) Assume that the shareholders of Hanson accept Drake's offer on the proposed date. Prepare Drake's January 1, Year 6. consolidated balance sheet after the proposed transaction occurred. (Negative amounts should be indicated by a minus sign.) Drake Enterprises Consolidated Balance Sheet January 1, Year 6 Assets $ 0 Liabilities and Equity $ 0 Check my work 3 (b) Assume that Drake is a private entity, uses ASPE, and chooses to use the equity method to account for its investment in Hanson, Prepare Drake's January 1, Year 6. balance sheet after the proposed transaction occurred. (Negative amounts should be Indicated by a minus sign.) 10 points Drake Enterprises Balance Sheet January 1, Year 6 eBook Assets Print References $ 0 Liabilities and Equity $ 0 (c) Calculate the debt-to-equity ratio under Consolidated and Equity Method. (Round your answers to 2 decimal places.) Consolidated Debt-to-equity ratio Equity Method 3 (d) Prepare Drake's consolidated balance sheet after the proposed transaction occurred using the worksheet approach. (Values in the first two columns and last column (the "parent", "subsidiary" and "consolidated" balances) that are to be deducted should be Indicated with a minus sign, while all values in the "Entry columns should be entered as positive values. For accounts where multiple adjusting entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Leave no cells blank - be certain to enter "o" wherever required. Omit $ sign in your response.) Consolidated Pinancial statement Working Paper Drake Company Consolidated Balance Sheet January 1, Year 6 eBook Entries Consolidated Drake $ Hansen $ Dr $ ferences Cash Accounts receivable Inventory Property, plant and equipment Accumulated depreciation Investment in Manson Acquisition differential Cuatomer service contracts Goodwill $ $ Current liabilities Ronda payable Liability for warranties Common shares Retained earnings Total $