Luckys Company acquires Waterview, Inc , by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $125,000 cash The assets and liabilities on Waterviews balance sheet were valued at fair values except equipment that was undervalued by $300,000 There was also an unrecorded patent valued at $40,000, as well as an unrecorded trademark valued at $75,000 In addition, the agreement provided for additional consideration, valued at $60,000, if certain earnings targets were met The pre acquisition balance sheets for the two companies at acquisition date are presented below Luckys Company Waterview, Inc Cash $300,000 $260,000 Accounts receivable 250,000 135,000 Inventory 254,000 275,000 Property, plant, and equipment 2,300,000 356,500 $3,104,000 $1,026,500 Accounts payable $45,000 $37,500 Salaries and taxes payable 450,000 46,000 Notes payable 500,000 450,000 Common stock 250,000 60,000 Additional paid in capital 950,000 106,500 Retained earnings 909,000 326,500 $3,104,000 $1,026,500 6 At what amount is the investment recorded on Luckys books a $1,000,000 b $1,100,000 c $1,125,000 d $1,185,000 7 Compute consolidated property, plant equipment a $2,600,000 b $2,656,500 c $2,956,500 d $3,071,500 8 What is consolidated retained earnings a $ 582,500 b $ 909,000 c $1,235,500 d $2,195,500 The following two questions are based on the following set of facts On January 1, 2021, Consolidated Company purchased 100 of the common stock Avergy Industries for $720,000 On that date, Avergy had common stock of $100,000 and retained earnings of $420,000 Equipment and land were each undervalued by $50,000 on Avergys books There was a $40,000 overvaluation of Bonds Payable, as well a $60,000 undervaluation of inventory 9 What is the amount of goodwill recorded in connection with this combination a $0 b $ 50,000 c $ 80,000 d $200,000 10 The consolidation entries necessary for a date of acquisition balance sheet include all of the following, except a Land debit, $50,000 b Inventory debit, $60,000 c Bonds Payable credit, $40,000 d Equipment debit, $50,000

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Luckys Company acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition

Luckys Company acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $125,000 cash. The assets and liabilities on Waterviews balance sheet were valued at fair values except equipment that was undervalued by $300,000. There was also an unrecorded patent valued at $40,000, as well as an unrecorded trademark valued at $75,000. In addition, the agreement provided for additional consideration, valued at $60,000, if certain earnings targets were met.

The pre-acquisition balance sheets for the two companies at acquisition date are presented below.

	Luckys Company	Waterview, Inc.
Cash	$300,000	$260,000
Accounts receivable	250,000	135,000
Inventory	254,000	275,000
Property, plant, and equipment	2,300,000	356,500
	$3,104,000	$1,026,500

Accounts payable	$45,000	$37,500
Salaries and taxes payable	450,000	46,000
Notes payable	500,000	450,000
Common stock	250,000	60,000
Additional paid-in capital	950,000	106,500
Retained earnings	909,000	326,500
	$3,104,000	$1,026,500

6. At what amount is the investment recorded on Luckys books?

a. $1,000,000

b. $1,100,000

c. $1,125,000

d. $1,185,000

7. Compute consolidated property, plant & equipment.

a. $2,600,000

b. $2,656,500

c. $2,956,500

d. $3,071,500

8. What is consolidated retained earnings?

a. $ 582,500

b. $ 909,000

c. $1,235,500

d. $2,195,500

The following two questions are based on the following set of facts.

On January 1, 2021, Consolidated Company purchased 100% of the common stock Avergy Industries for $720,000. On that date, Avergy had common stock of $100,000 and retained earnings of $420,000. Equipment and land were each undervalued by $50,000 on Avergys books. There was a $40,000 overvaluation of Bonds Payable, as well a $60,000 undervaluation of inventory.

9. What is the amount of goodwill recorded in connection with this combination?

a. $0

b. $ 50,000

c. $ 80,000

d. $200,000

10. The consolidation entries necessary for a date of acquisition balance sheet include all of the following, except:

a. Land debit, $50,000

b. Inventory debit, $60,000

c. Bonds Payable credit, $40,000

d. Equipment debit, $50,000