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I have included the related question P3.2 And the solution for it. But I only need the solution for only P4.9. please and thanks so
I have included the related question P3.2 And the solution for it. But I only need the solution for only P4.9. please and thanks so much!
A B C E F G H M N Consolidation Working Paper, Three Years After Acquisition (see related P3.2) Interna- tional Technology Inc. (TTI) acquired all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2018, for $110 million in cash and stock, plus an earnings contingency payable at the end of the third year witha fair value of $2 million at the date of acquisition. Within the measurement period, the earnings contingency declined to a fair value of zero and the acquisition price was appropriately adjusted. Both companies have a June 30 year-end. At June 30, 2018, GOC's total shareholders equity was $40 million, as follows (in millions): P4.9 Common stock, par Additional paid-in capital. Retained earnings (deficit) Accumulated other comprehensive income Treasury stock (2) Total $40 At the acquisition date, GOC's inventories were undervalued by $5 million, its property, plant and equip- ment was overvalued by $60 million, its reported patents and trademarks were undervalued by $10 million, and its long-term debt was undervalued by $3 million. GOC also had previously unreported identifiable intangibles: $5 million of advanced technology and $25 million of customer lists. GOC re- ports its inventory using the LIFO method, and purchases exceed sales every year. The acquisition date remaining lives of its assets and liabilities are as follows: D E F G H K M C Property, plant and equipment, net. Patents and trademarks. Advanced technology Customer lists... Long-term debt.. 20 years 5 years 5 years Indefinite 3 years The straight-line method is used for limited-life assets. Impairment losses on the customer lists were $2 million in fiscal 2020 and $4 million in fiscal 2021. Goodwill impairment losses were $2 million in fiscal 2019, $3 million in fiscal 2020, and $2 million in fiscal 2021 GOC reported net income of $15 million in fiscal 2019, and a net loss of $2 million in fiscal 2020 Neither company pays dividends. ITI uses the complete equity method to account for its investment in GOC on its own books. The trial balances of ITI and GOC at June 30, 2021, are as follows Dr (Cr) (In milllions) ITI GOC Current assets Property, plant and equipment, net. Identifiable intang ible assets Investment in GOC. Current liabilities. Long-term liabilities. Common stock, par Additional paid-in capital. Retained earnings, July 1. Accumulated other comprehensive income, July 1 S 232 600 140 30 1,100 127 (175) (1,125) (22) (580) (118) (16) (10) (105) (4) (60) (4) B D E F G K H M N C (in milllons) ITI GOC Current assets $ 232 S 12 Property, plant and equipment, net. Identifiable intangible assets Investment in GOC. 600 140 1,100 30 127 Current liabilities. (175) (1,125) (22) (580) (118) (16) 8 (10) (105) Long-term liabilities Common stock, par Additional paid-in capital. Retained earnings, July 1 Accumulated other comprehensive income, July 1 Treasury stock Sales revenue. Equity in net income of GOC Equity in OCI of GOC.. Cost of goods sold Operating expenses..... Other comprehensive income. Totals (4) 2 (2,000) (7) (1) 1,400 (900) 800 88 (1) 580 (3) 10 Required a. Prepare a schedule that computes the June 30, 2021, investment in GOC balance and 2021 equity in net income on ITT's books. b. Use a working paper to consolidate the trial balances of ITI and GOC at June 30, 2021. c. Present the consolidated balance sheet at June 30, 2021, and the consolidated statement of compre- hensive income for 2021. P3.2 Consolidation Working Paper, Identifiable Intangibles, Goodwill International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2018. Amounts paid are as follows (in millions) $50 Cash consideration to the former shareholders of GOC 2,000,000 shares of new $1 par common stock issued. Registration fees on new stock issued, paid in cash Outside legal and advisory services, paid in cash Fair value of eamings contingency.. 60 3 5 2 The earmings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisi- tion are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. GOC ITI Balance Sheets (in millions) Fair Value Book Value Book Value Current assets Property. plant and equipment, net. Intangible assets. $ 200 $ 10 $15 500 130 70 1,300 20 30 Total assets. . $2,000 $160 Current liabilities. Long-term liabilities. Common stock, par Additional paid-in capital. Retained eamings Accumulated other comprehensive income $ 20 100 4 S 150 1,200 20 20 103 550 100 60 (25) 3 (15) (5) Treasury stock (2) Total liabilities and equity $2,000 $160 The intangible assets reported above consist of patents and trademarks. GOC also has the following pre- viously unreported intangible assets that meet ASC Topie 805 requirements for asset recognition: P3.2 Data Fair vaiue Advanced technology Customer lists. $ 5 25 Required Prepare the journal entry or entries ITI makes to record the acquisition on its own books. a. b. Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2018 a. Prepare the journal entry or entries ITI makes to record the acquisition (in millions) on its own books. Description Investment in (GOC) Merger Expense Common Stock Debit Credit 112 5 2 Additional Paid In Capital Contingent Consideration Liability 55 Cash 58 Good Job! b. Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2018. (in millions) Accounts Taken From Books Eliminations Cons lidated Balances GOC Dr (Cr) ITI Dr (Cr) 142 $ $ Dr (Cr) $ Debit Credit Current assets Property, plant and equipment, net Investment in GOC 10 R 130 5 157 500 60 570 112 40 72 1,300 Identifiable intangible assets Advanced Technology Customer Lists 20 R 1,360 10 5 25 90 Goodwill Current liabilities 90 (150) (1,202) (22) (605) (95) 15 (20) (100) (4) E (60) E (170) (1,305) (22) (605) (95) 15 Long-term liabilities Common stock, par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total 3 R 4 25 25 E (3) E 2 E 2 5 $ 202 $ 202 $ RER 60 RRRR A B C E F G H M N Consolidation Working Paper, Three Years After Acquisition (see related P3.2) Interna- tional Technology Inc. (TTI) acquired all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2018, for $110 million in cash and stock, plus an earnings contingency payable at the end of the third year witha fair value of $2 million at the date of acquisition. Within the measurement period, the earnings contingency declined to a fair value of zero and the acquisition price was appropriately adjusted. Both companies have a June 30 year-end. At June 30, 2018, GOC's total shareholders equity was $40 million, as follows (in millions): P4.9 Common stock, par Additional paid-in capital. Retained earnings (deficit) Accumulated other comprehensive income Treasury stock (2) Total $40 At the acquisition date, GOC's inventories were undervalued by $5 million, its property, plant and equip- ment was overvalued by $60 million, its reported patents and trademarks were undervalued by $10 million, and its long-term debt was undervalued by $3 million. GOC also had previously unreported identifiable intangibles: $5 million of advanced technology and $25 million of customer lists. GOC re- ports its inventory using the LIFO method, and purchases exceed sales every year. The acquisition date remaining lives of its assets and liabilities are as follows: D E F G H K M C Property, plant and equipment, net. Patents and trademarks. Advanced technology Customer lists... Long-term debt.. 20 years 5 years 5 years Indefinite 3 years The straight-line method is used for limited-life assets. Impairment losses on the customer lists were $2 million in fiscal 2020 and $4 million in fiscal 2021. Goodwill impairment losses were $2 million in fiscal 2019, $3 million in fiscal 2020, and $2 million in fiscal 2021 GOC reported net income of $15 million in fiscal 2019, and a net loss of $2 million in fiscal 2020 Neither company pays dividends. ITI uses the complete equity method to account for its investment in GOC on its own books. The trial balances of ITI and GOC at June 30, 2021, are as follows Dr (Cr) (In milllions) ITI GOC Current assets Property, plant and equipment, net. Identifiable intang ible assets Investment in GOC. Current liabilities. Long-term liabilities. Common stock, par Additional paid-in capital. Retained earnings, July 1. Accumulated other comprehensive income, July 1 S 232 600 140 30 1,100 127 (175) (1,125) (22) (580) (118) (16) (10) (105) (4) (60) (4) B D E F G K H M N C (in milllons) ITI GOC Current assets $ 232 S 12 Property, plant and equipment, net. Identifiable intangible assets Investment in GOC. 600 140 1,100 30 127 Current liabilities. (175) (1,125) (22) (580) (118) (16) 8 (10) (105) Long-term liabilities Common stock, par Additional paid-in capital. Retained earnings, July 1 Accumulated other comprehensive income, July 1 Treasury stock Sales revenue. Equity in net income of GOC Equity in OCI of GOC.. Cost of goods sold Operating expenses..... Other comprehensive income. Totals (4) 2 (2,000) (7) (1) 1,400 (900) 800 88 (1) 580 (3) 10 Required a. Prepare a schedule that computes the June 30, 2021, investment in GOC balance and 2021 equity in net income on ITT's books. b. Use a working paper to consolidate the trial balances of ITI and GOC at June 30, 2021. c. Present the consolidated balance sheet at June 30, 2021, and the consolidated statement of compre- hensive income for 2021. P3.2 Consolidation Working Paper, Identifiable Intangibles, Goodwill International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2018. Amounts paid are as follows (in millions) $50 Cash consideration to the former shareholders of GOC 2,000,000 shares of new $1 par common stock issued. Registration fees on new stock issued, paid in cash Outside legal and advisory services, paid in cash Fair value of eamings contingency.. 60 3 5 2 The earmings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisi- tion are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided. GOC ITI Balance Sheets (in millions) Fair Value Book Value Book Value Current assets Property. plant and equipment, net. Intangible assets. $ 200 $ 10 $15 500 130 70 1,300 20 30 Total assets. . $2,000 $160 Current liabilities. Long-term liabilities. Common stock, par Additional paid-in capital. Retained eamings Accumulated other comprehensive income $ 20 100 4 S 150 1,200 20 20 103 550 100 60 (25) 3 (15) (5) Treasury stock (2) Total liabilities and equity $2,000 $160 The intangible assets reported above consist of patents and trademarks. GOC also has the following pre- viously unreported intangible assets that meet ASC Topie 805 requirements for asset recognition: P3.2 Data Fair vaiue Advanced technology Customer lists. $ 5 25 Required Prepare the journal entry or entries ITI makes to record the acquisition on its own books. a. b. Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2018 a. Prepare the journal entry or entries ITI makes to record the acquisition (in millions) on its own books. Description Investment in (GOC) Merger Expense Common Stock Debit Credit 112 5 2 Additional Paid In Capital Contingent Consideration Liability 55 Cash 58 Good Job! b. Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2018. (in millions) Accounts Taken From Books Eliminations Cons lidated Balances GOC Dr (Cr) ITI Dr (Cr) 142 $ $ Dr (Cr) $ Debit Credit Current assets Property, plant and equipment, net Investment in GOC 10 R 130 5 157 500 60 570 112 40 72 1,300 Identifiable intangible assets Advanced Technology Customer Lists 20 R 1,360 10 5 25 90 Goodwill Current liabilities 90 (150) (1,202) (22) (605) (95) 15 (20) (100) (4) E (60) E (170) (1,305) (22) (605) (95) 15 Long-term liabilities Common stock, par Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total 3 R 4 25 25 E (3) E 2 E 2 5 $ 202 $ 202 $ RER 60 RRRR
I have included the related question P3.2 And the solution for it. But I only need the solution for only P4.9. please and thanks so much!
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