Consolidated Balance Sheet Working Paper, Bargain Gain, Special Issues

Packard Industries acquires all of the stock of Steamobile Company for $20 million in cash, and reports the acquisition as a stock acquisition on its own books. The balance sheet accounts of Packard and Steamobile, immediately prior to the acquisition, are as follows (in thousands):

Consolidated Balance Sheet Working Paper, Bargain Gain, Special Issues

Packard Industries acquires all of the stock of Steamobile Company for $20 million in cash, and reports the acquisition as a stock acquisition on its own books. The balance sheet accounts of Packard and Steamobile, immediately prior to the acquisition, are as follows (in thousands):

	Packard	Steamobile
(in thousands)	Book Value Dr (Cr)	Book Value Dr (Cr)	Fair Value Dr (Cr)
Current assets	$35,000	$5,000	$3,000
Fixed assets	500,000	150,000	140,000
Accumulated depreciation	(160,000)	(40,000)	--
Goodwill	--	35,000	--
Liabilities	(215,000)	(120,000)	(121,000)
Capital stock	(90,000)	(35,000)
Retained earnings	(70,500)	5,800
Accumulated other comprehensive income	500	(800)
Total	$0	$0

Steamobile has previously unreported identifiable intangibles with a fair value of $6 million that are separately capitalized per ASC Topic 805.

a. Prepare a schedule calculating the excess of Steamobile's book value over acquisition cost, its allocation to Steamobile's identifiable net assets, and the amount of the bargain gain.

• When appropriate, use negative signs with your excess of fair value over book value answers (left column only).
• Do not use negative signs with answers in the right column.
• Enter answers in thousands.

Acquisition cost		Answer
Steamobile book value		Answer
Excess of acquisition cost over book value		Answer
Excess of fair value over book value:
Current assets	Answer
Fixed assets, net	Answer
AnswerCapital stockIdentifiable intangiblesRetained earningsAccumulated other comprehensive income	Answer
AnswerCapital stockGoodwillRetained earningsAccumulated other comprehensive income	Answer
Liabilities	Answer	Answer
Bargain gain		Answer

b. Prepare a consolidation working paper to consolidate Packard and Steamobile at the date of acquisition.

• Use negative signs with your credit balance answers in the Dr (Cr) columns.
• Enter answers in thousands.

Consolidation Working Paper
	Accounts Taken From Books		Eliminations
(in thousands)	Packard Dr (Cr)	Steammobile Dr (Cr)		Debit	Credit		Consolidated Balances Dr (Cr)
Current assets	Answer	Answer			Answer	(R)	Answer
Fixed assets	Answer	Answer	(R)	Answer	Answer	(R)	Answer
Accumulated depreciation	Answer	Answer	(R)	Answer			Answer
Investment in Steamobile	Answer	--	(R)	Answer	Answer	(E)	Answer
AnswerCapital stockIdentifiable intangiblesRetained earningsAccumulated other comprehensive income	--		(R)	Answer			Answer
AnswerCapital stockGoodwillRetained earningsAccumulated other comprehensive income	--	Answer			Answer	(R)	Answer
Liabilities	Answer	Answer			Answer	(R)	Answer
Capital stock	Answer	Answer	(E)	Answer			Answer
Retained earnings	Answer	Answer			Answer	(E)	Answer
AOCI	Answer	Answer	(E)	Answer			Answer
Total	Answer	Answer		Answer	Answer		Answer

c. Prepare the consolidated balance sheet at the date of acquisition.

• Do not use negative signs with any of your answers below.
• Enter answers in thousands.

Packard and Subsidiary Consolidated Balance Sheet Date of Acquisition
Assets		Liabilities
Current assets	Answer	Liabilities	Answer
Fixed assets, net	Answer
Identifiable intangibles	Answer	Shareholders' equity
		Capital stock	Answer
		Retained earnings	Answer
		Accumulated other comp. loss	Answer
		Total shareholders' equity	Answer
Total assets	Answer	Total liabilities and equity	Answer

Please answer all parts of the question.

Steamobile has previously unreported identifiable intangibles with a fair value of $6 million that are separately capitalized per ASC Topic 805.

a. Prepare a schedule calculating the excess of Steamobile's book value over acquisition cost, its allocation to Steamobile's identifiable net assets, and the amount of the bargain gain.

• When appropriate, use negative signs with your excess of fair value over book value answers (left column only).
• Do not use negative signs with answers in the right column.
• Enter answers in thousands.

Acquisition cost		Answer
Steamobile book value		Answer
Excess of acquisition cost over book value		Answer
Excess of fair value over book value:
Current assets	Answer
Fixed assets, net	Answer
AnswerCapital stockIdentifiable intangiblesRetained earningsAccumulated other comprehensive income	Answer
AnswerCapital stockGoodwillRetained earningsAccumulated other comprehensive income	Answer
Liabilities	Answer	Answer
Bargain gain		Answer

b. Prepare a consolidation working paper to consolidate Packard and Steamobile at the date of acquisition.

• Use negative signs with your credit balance answers in the Dr (Cr) columns.
• Enter answers in thousands.

Consolidation Working Paper
	Accounts Taken From Books		Eliminations
(in thousands)	Packard Dr (Cr)	Steammobile Dr (Cr)		Debit	Credit		Consolidated Balances Dr (Cr)
Current assets	Answer	Answer			Answer	(R)	Answer
Fixed assets	Answer	Answer	(R)	Answer	Answer	(R)	Answer
Accumulated depreciation	Answer	Answer	(R)	Answer			Answer
Investment in Steamobile	Answer	--	(R)	Answer	Answer	(E)	Answer
AnswerCapital stockIdentifiable intangiblesRetained earningsAccumulated other comprehensive income	--		(R)	Answer			Answer
AnswerCapital stockGoodwillRetained earningsAccumulated other comprehensive income	--	Answer			Answer	(R)	Answer
Liabilities	Answer	Answer			Answer	(R)	Answer
Capital stock	Answer	Answer	(E)	Answer			Answer
Retained earnings	Answer	Answer			Answer	(E)	Answer
AOCI	Answer	Answer	(E)	Answer			Answer
Total	Answer	Answer		Answer	Answer		Answer

c. Prepare the consolidated balance sheet at the date of acquisition.

• Do not use negative signs with any of your answers below.
• Enter answers in thousands.

Packard and Subsidiary Consolidated Balance Sheet Date of Acquisition
Assets		Liabilities
Current assets	Answer	Liabilities	Answer
Fixed assets, net	Answer
Identifiable intangibles	Answer	Shareholders' equity
		Capital stock	Answer
		Retained earnings	Answer
		Accumulated other comp. loss	Answer
		Total shareholders' equity	Answer
Total assets	Answer	Total liabilities and equity	Answer

Please answer all parts of the question.