Consolidation Accounting After an intense period of negotiation, Global Enterprises Corporation agreed to purchase all of the outstanding common shares of The Carlton Corporation. The agreed-upon price was $58.8 million, payable in Global Enterprise shares. According to the agreement, Global Enterprises would issue one share of its common stock in exchange for each share of The Carlton Corporation. Following the exchange, The Carlton Corporation would become a wholly-owned subsidiary of Global Enterprises. At the time of the negotiations, the market price of Global Enterprises' shares was $24.50 per share. Presented below are the pre-acquisition balance sheets of Global Enterprises and The Carlton Corporation: Pre-acquisition Balance Sheets Global Enterprises Corporation The Carlton Corporation Assets Cash $ 16,000,000 $5,000,000 Short-term investments 10,000,000 7,000,000 Accounts receivable (net) 15,000,000 10,000,000 Inventory (LIFO) 38,000,000 19,000,000 Property Property & equipment (net) 76,000,000 46,000,000 Other asset Other assets 9,000,000 3,000,000 Toes Total assets $164,000,000 $90,000,000 Liabilities & Shareholders' Equity Accounts payable $ 19,000,000 $ 15,000,000 Other current liabilities 8,000,000 Bonds payable 22,000,000 Other long-term debt 15,000,000 25,000,000 Common stock ($10 par) 24,000,000 Common stock ($5 par) 12,000,000 Capital in excess of par value 14,000,000 4,000,000 Retained earnings 62,000,000 28,000,000 Total liabilities & shareholders' equity $164,000,000 $90,000,000 6,000,000 As part of Global Enterprises' due diligence, the company determined that while the liabilities of The Carlton Corporation were fairly valued, some of the company's assets were not fairly valued The fair value of Carlton's assets were as follows: Asset Fair Maket Value Under/(Over) Statement Cash $5,000,000 $0 $0 Short-term investments 9,000,000 2,000,000 Accounts receivable (net) 7,000,000 (3,000,000) Inventory (LIFO) 26,000,000 7,000,000 Property & equipment (net) 56,000,000 10,000,000 Other assets 0 (3,000,000) Total $103,000,000 $13,000,000 Required Prepare the consolidated balance sheet immediately following the acquisition using consolidation accounting, Remember to use a negative sign with adjustment answers, when appropriate. Pre-Consolidation Global Enterprises The Carlton Corp. Adjustments Consolidated Cash $ OX OXS OX Short-term investments 0x 0 X 0 x OX 0 Accounts receivable (net) OX OX OX Inventory (LIFO) 0X 0 x 0 x Property & equipment (net) OX OX OX OX Other assets OX OX OX OX Investment in Cariton OX 0 OX 0 Goodwill 0 0 OX OX Total $ $ OX OX $ OX li Liabilities & Shareholders' Equity Accounts payable $ 0X $ OX 0$ OX AL Other current liabilities OX OX 0 OX Bonds payable OX 0 OX Other long-term debt OX OX 0 OX Common stock ($10 par) OX 0 0x Common stock (55 par) 0 OX Capital in excess of par value 0 x OX OX OX Retained earnings OX OX OX Total $ OX $ $ 0X Check Consolidation Accounting After an intense period of negotiation, Global Enterprises Corporation agreed to purchase all of the outstanding common shares of The Carlton Corporation. The agreed-upon price was $58.8 million, payable in Global Enterprise shares. According to the agreement, Global Enterprises would issue one share of its common stock in exchange for each share of The Carlton Corporation. Following the exchange, The Carlton Corporation would become a wholly-owned subsidiary of Global Enterprises. At the time of the negotiations, the market price of Global Enterprises' shares was $24.50 per share. Presented below are the pre-acquisition balance sheets of Global Enterprises and The Carlton Corporation: Pre-acquisition Balance Sheets Global Enterprises Corporation The Carlton Corporation Assets Cash $ 16,000,000 $5,000,000 Short-term investments 10,000,000 7,000,000 Accounts receivable (net) 15,000,000 10,000,000 Inventory (LIFO) 38,000,000 19,000,000 Property Property & equipment (net) 76,000,000 46,000,000 Other asset Other assets 9,000,000 3,000,000 Toes Total assets $164,000,000 $90,000,000 Liabilities & Shareholders' Equity Accounts payable $ 19,000,000 $ 15,000,000 Other current liabilities 8,000,000 Bonds payable 22,000,000 Other long-term debt 15,000,000 25,000,000 Common stock ($10 par) 24,000,000 Common stock ($5 par) 12,000,000 Capital in excess of par value 14,000,000 4,000,000 Retained earnings 62,000,000 28,000,000 Total liabilities & shareholders' equity $164,000,000 $90,000,000 6,000,000 As part of Global Enterprises' due diligence, the company determined that while the liabilities of The Carlton Corporation were fairly valued, some of the company's assets were not fairly valued The fair value of Carlton's assets were as follows: Asset Fair Maket Value Under/(Over) Statement Cash $5,000,000 $0 $0 Short-term investments 9,000,000 2,000,000 Accounts receivable (net) 7,000,000 (3,000,000) Inventory (LIFO) 26,000,000 7,000,000 Property & equipment (net) 56,000,000 10,000,000 Other assets 0 (3,000,000) Total $103,000,000 $13,000,000 Required Prepare the consolidated balance sheet immediately following the acquisition using consolidation accounting, Remember to use a negative sign with adjustment answers, when appropriate. Pre-Consolidation Global Enterprises The Carlton Corp. Adjustments Consolidated Cash $ OX OXS OX Short-term investments 0x 0 X 0 x OX 0 Accounts receivable (net) OX OX OX Inventory (LIFO) 0X 0 x 0 x Property & equipment (net) OX OX OX OX Other assets OX OX OX OX Investment in Cariton OX 0 OX 0 Goodwill 0 0 OX OX Total $ $ OX OX $ OX li Liabilities & Shareholders' Equity Accounts payable $ 0X $ OX 0$ OX AL Other current liabilities OX OX 0 OX Bonds payable OX 0 OX Other long-term debt OX OX 0 OX Common stock ($10 par) OX 0 0x Common stock (55 par) 0 OX Capital in excess of par value 0 x OX OX OX Retained earnings OX OX OX Total $ OX $ $ 0X Check
