Consolidated Balance Sheet Working Paper, Identifiable Intangibles

International Auto (IA) acquires all of the stock of Genuine Parts (GP) and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments. All amounts are in thousands.

Cash paid to GP shareholders	$15,000
Cash paid to consultants and lawyers	3,600
Fair value of new IA stock issued, 1,000 shares, $6 par	108,000
Stock registration fees, paid in cash	2,700
Fair value of earnings contingency	750

The earnings contingency, if paid, will occur three years subsequent to the acquisition. The balance sheet accounts of GP and IA, just prior to the acquisition, are as follows:

	International Auto	Genuine Parts
	Book Value Dr (Cr)	Book Value Dr (Cr)	Fair Value Dr (Cr)
Current assets	$90,000	$3,000	$3,600
Fixed assets, net	1,260,000	81,000	60,000
Trademarks	267,000	10,200	18,000
Current liabilities	(75,000)	(1,200)	(1,200)
Long-term liabilities	(1,050,000)	(78,000)	(75,000)
Common stock, par value	(24,000)	(1,500)
Additional paid-in capital	(330,000)	(25,500)
Retained earnings	(135,000)	6,000
Accumulated other comprehensive income	(12,000)	4,200
Treasury stock	9,000	1,800
Total	$0	$0

In addition to the assets reported on GP's balance sheet, the following previously unreported intangible assets are identified. Note: Some of these intangibles may not be separately capitalized per ASC Topic 805.

	Fair value
Licensing agreements	$7,200
Skilled workforce	45,000
Order backlogs	15,000
Future synergies between IA and GP supply chains	4,800

a. Prepare a schedule calculating the excess of acquisition cost over GP's book value, and its allocation to GP's identifiable net assets and goodwill.

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.

Acquisition cost		$Answer
GP's 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
Trademarks	Answer
AnswerRetained earningsSkilled workforceFuture synergies between supply chainsLicensing agreementsAccumulated other comprehensive income	Answer
AnswerRetained earningsSkilled workforceOrder backlogsFuture synergies between supply chainsAccumulated other comprehensive income	Answer
Long-term liabilities	Answer	Answer
Goodwill		$Answer

b. Prepare a consolidation working paper to consolidate IA and GP at the date of acquisition.

Remember to use negative signs with your credit balance answers in the Dr (Cr) columns.

Consolidation Working Paper (in thousands)
	Accounts Taken From Books		Eliminations
	International Auto Dr (Cr)	Genuine Parts Dr (Cr)		Debit	Credit		Consolidated Balances Dr (Cr)
Current assets	$Answer	$Answer	(R)	Answer			$Answer
Fixed assets, net	Answer	Answer			Answer	(R)	Answer
Investment in GP	Answer	--			Answer	(E)	Answer
					Answer	(R)	--
Trademarks	Answer	Answer	(R)	Answer			Answer
AnswerRetained earningsSkilled workforceFuture synergies between supply chainsLicensing agreementsAccumulated other comprehensive income	--	--	(R)	Answer			Answer
AnswerRetained earningsSkilled workforceOrder backlogsFuture synergies between supply chainsAccumulated other comprehensive income			(R)	Answer			Answer
Goodwill	--	--	(R)	Answer			Answer
Current liabilities	Answer	Answer					Answer
Long-term liabilities	Answer	Answer	(R)	Answer			Answer
Common stock, par	Answer	Answer	(E)	Answer			Answer
Additional paid-in capital	Answer	Answer	(E)	Answer			Answer
Retained earnings	Answer	Answer			Answer	(E)	Answer
AOCI	Answer	Answer			Answer	(E)	Answer
Treasury stock	Answer	Answer			Answer	(E)	Answer
Total	$Answer	$Answer		$Answer	$Answer		$Answer

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

Remember to use a negative sign with your treasury stock answer.

International Auto and Subsidiary Consolidated Balance Sheet Date of Acquisition
Assets		Liabilities
Current assets	$Answer	Current liabilities	$Answer
Fixed assets, net	Answer	Long-term liabilities	Answer
Trademarks	Answer	Total liabilities	Answer
Other identifiable intangible assets	Answer
Goodwill	Answer	Stockholders' equity
		Common stock, par	Answer
		Additional paid-in capital	Answer
		Retained earnings	Answer
		Accumulated other comprehensive income	Answer
		Treasury stock	Answer
		Total stockholders' equity	Answer
Total assets	$Answer	Total liabilities and equity	$Answer

Please answer a,b, and c because they are all part of one question.