Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 110,000 shares of its Common Stock, with a market value on the acquisition date of $40 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their book values except for a building that it feels is undervalued by $1,000,000, an unrecorded License Agreement that the parent values at $500,000, and an unrecorded Customer List owned by the subsidiary that the parent values at $200,000. Any further discrepancy between the purchase price and the book value of the subsidiary's Stockholders' Equity is attributed to expected synergies to be realized by the consolidated company as a result of the acquisition. a. Given the following acquisition-date balance sheets of the parent and subsidiary, at what amounts will each of the following be reported on the consolidated balance sheet? Balance Sheet Parent Subsidiary Assets Cash $1,821,000 $403,200 Accounts receivable 768,000 835,200 Inventory 1,164,000 1,072,800 Equity investment 4.400,000 Property, plant and equipment (PPE) net 5,599,200 1.984,800 $13,752,200 $4,296,000 Liabilities and stockholders' equity Accounts payable $376,200 $254,000 Accrued liabilities 441,600 442,000 Long-term liabilities 2,000,000 1.200,000 Common stock 440,000 240,000 APIC 7.480,000 300,000 Retained earnings 3,014,400 1.860,000 $13.752,200 $4,296,000 1. Accounts Receivable $ 1,603,200 2. Equity Investment $ 0 3. PPE, net $ OX 4. Goodwill $ OX 5. Common Stock $ OX 6. APIC $ 7. Retained Earnings $ OX >> X a. Given the following acquisition date balance sheets of the parent and subsidiary, at what amounts will each of the following be reported on the consolidated balance sheet? Balance Sheet Parent Subsidiary Assets Cash $1,821,000 $403,200 Accounts receivable 768,000 B35,200 Inventory 1,164,000 1,072,800 Equity investment 4.400,000 Property, plant and equipment (PPE), net 5,599 200 1.984,800 $13,752,200 $4,296,000 Liabilities and stockholders' equity Accounts payable $376,200 $254,000 Accrued liabilities 441,600 442,000 Long-term liabilities 2,000,000 1,200,000 Common stock 440,000 240,000 APIC 7.480,000 300,000 Retained earnings 3,014,400 1,860,000 $13,752,200 $4,296,000 1. Accounts Receivable $ 1,603,200 2. Equity Investment $ 3. PPE, net $ OX 4. Goodwill $ 0 x 5. Common Stock $ OX 6. APIC $ Ox 7. Retained Earnings $ OX b. What intangible assets will be reported on the consolidated balance sheet and at what amounts? License Agreements OX $ Customer List Goodwill OX OX $
