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I need help with this question. I am having trouble allocating the right answer. Following are preacquisition financial balances for Padre Company and Sol Company
I need help with this question. I am having trouble allocating the right answer.
Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Cash Receivables Inventory Land Building and equipment (net) Franchise agreements Accounts payable Accrued expenses Long-term liabilities Common stock$20 par value Common stock$5 par value Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Padre Company Book Values 12/31 $ 262,500 251,250 432,500 762,500 637,500 232,000 (314,000) (121,000) (927,500) (660,000) (70,000) (440,000) (1,052,750) 1,007,000 Sol Company Book Values Fair Values 12/31 12/31 $ 46,850 $ 46,850 358,000 358,000 305,000 356,400 163,000 141,500 320,000 387,100 268,000 303,000 (183,000) (183,000) (33,250) (33,250) (670,000) (670,000) (210,000) (90,000) (249,000) (360,600) 335,000 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol's outstanding stock by paying $393,000 in cash and issuing 10,400 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,400 as well as $9,200 in stock issuance costs. Determine the value that would be shown in Padre's consolidated financial statements for each of the accounts listed. Accounts Amounts Inventory Land Buildings and equipment Franchise agreements Goodwill Revenues Additional paid-in capital Expenses Retained earnings, 1/1 Retained earnings, 12/31 References eBook & Resources Problem Learning Objective: 02-04 Describe the valuation principles of the acquisition method. Problem 2-22 (LO 2-4, 2-5, 2-6, 2-7) Learning Objective: 02-05 Determine the total fair value of the consideration transferred for an acquisition and allocate that fair value to specific subsidiary assets acquired (including goodwill) and liabilities assumed or to a gain on bargain purchase. Difficulty: Medium Learning Objective: 02-06 Prepare the journal entry to consolidate the accounts of a subsidiary if dissolution takes place. Check my work Learning Objective: 02-07 Prepare a worksheet to consolidate the accounts of two companies that form a business combination if dissolution does not take placeStep by Step Solution
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