Question
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:
Peach Company Swartz Company
Cash $71,250 $13,190
Accounts receivable (net) 99,260 20,070
Inventory 63,300 26,980
Plant and equipment (net) 99,340 39,970
Land 27,990 21,440
Total assets $361,140 $121,650
Accounts payable $64,130 $16,800
Notes payable 85,460 20,800
Common stock, $20 par value 108,400 36,400
Other contributed capital 58,280 23,800
Retained earnings 44,870 23,850
Total equities $361,140 $121,650
Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.
(a)
Prepare the journal entries on Peach Company's books to record the exchange of stock.(If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Account Titles and Explanation Debit Credit
(To record exchange of stock)
(To record registration costs)
(b)
Prepar a Computation and Allocation Schedule for the difference between book value and value implied by the purchase price.
Parent
ShareNon-
Controlling
ShareEntire
Value
Balance
Book Value of Equity Acquired
Difference Between Implied and Book Value
Goodwill
Purchase Price and Implied Value
$
$
$
Add
Less
:
Balance
Book Value of Equity Acquired
Difference Between Implied and Book Value
Goodwill
Purchase Price and Implied Value
Balance
Book Value of Equity Acquired
Difference Between Implied and Book Value
Goodwill
Purchase Price and Implied Value
Balance
Book Value of Equity Acquired
Difference Between Implied and Book Value
Goodwill
Purchase Price and Implied Value
Balance
Book Value of Equity Acquired
Difference Between Implied and Book Value
Goodwill
Purchase Price and Implied Value
$
$
$
(c)
Prepar a consolidated balance sheet at the date of acquisition.(List assets in order of liquidity.)
Peach Company and Subsidiary
Consolidated Balance Sheet
January 1, 2010
For the Year Ended January 1, 2010
For the Quarter Ended January 1, 2010
Assets
$
Current Assets
Current Liabilities
Intangible Assets
Liabilities
Long-term Investments
Long-term Liabilities
Net Income / (Loss)
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
$
Liabilities and Stockholders' Equity
Current Assets
Current Liabilities
Intangible Assets
Liabilities
Long-term Investments
Long-term Liabilities
Net Income / (Loss)
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
$
Current Assets
Current Liabilities
Intangible Assets
Liabilities
Long-term Investments
Long-term Liabilities
Net Income / (Loss)
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
Current Assets
Current Liabilities
Intangible Assets
Liabilities
Long-term Investments
Long-term Liabilities
Net Income / (Loss)
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
Current Assets
Current Liabilities
Intangible Assets
Liabilities
Long-term Investments
Long-term Liabilities
Net Income / (Loss)
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
Current Assets
Current Liabilities
Intangible Assets
Liabilities
Long-term Investments
Long-term Liabilities
Net Income / (Loss)
Property, Plant and Equipment
Stockholders' Equity
Total Assets
Total Current Assets
Total Current Liabilities
Total Intangible Assets
Total Liabilities
Total Liabilities and Stockholders' Equity
Total Long-term Investments
Total Long-term Liabilities
Total Property, Plant and Equipment
Total Stockholders' Equity
$
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Financial Statement Fraud Prevention And Detection
Authors: Zabihollah Rezaee, Richard Riley
2nd Edition
0470543205, 9780470543207
