Hutch Ltd. acquired 100% of the outstanding common shares of Hexco Ltd. on December 30, 2020 for $ 490,000 cash.

Legal and accounting costs of the acquisition of $ 50,000 were paid in cash on that day.

The carrying value of the net assets of Hexco approximated fair values except for plant and equipment which had a fair value of $ 332,000,

inventory which had a fair value of $120,000,

accounts receivable which had a fair value of $ 40,000 and

bonds payable which had a fair value of $ 110,000.

The statement of financial position of Hutch Ltd. and Hexco Ltd. on December 30, 2020 PRIOR to the acquisition transaction outlined above is shown below.

Required (Show components of all calculations):

1. The attached consolidation worksheet is based on the above information showing all debit and credit amounts and is provided for your reference only. You need not complete and submit it. Formal acquisition and consolidation journal entries are not required. Calculate the consolidated balance sheet balances at Dec 30, 2020 after the above acquisition and insert your answers on the ANSWER SHEET FOR GRADING.

2.Assume the same information as above except that a 80% acquisition occurred. Calculate the new balances of any balance sheet amounts that would change from the calculations in # 1 above. Submit your answers on the ANSWER SHEET FOR GRADING.

Question 22 - Financial Statement Sample Worksheet To Be Completed

Acquisiton and

Consolidation

Hutch Ltd. Hexco Ltd. Adjustments Consolidated

12/30/2020 12/30/2020 Debit Credit 12/30/2020

$ $

Assets

Plant and equipment 400,000 270,000

Inventory 120,000 102,000

Accounts receivable 45,000 48,000

Cash 631,000 60,000 _________

1,196,000 480,000 ___________

Liabilities

Current liabilities 296,000 72,000

Bonds payable 440,000 108,000 ___________

736,000 180,000 ___________

Shareholders Equity

Common shares 260,000 120,000

Retained earnings 200,000 180,000_ ___________

460,000 300,000_ ___________

Total Liabilities and

Shareholders Equity 1,196,000 480,000 ___________