Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these hares, Presidio issued to the

image text in transcribedimage text in transcribedimage text in transcribed On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these hares, Presidio issued to the owners of Mason $273,000 in long-term liabilities and 20,000 shares of common stock having a par alue of $1 per share but a fair value of $10 per share. Presidio paid $21,000 to accountants, lawyers, and brokers for assistance in the cquisition and another $6,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Note: Parentheses indicate a credit balance. Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $6,850, Land by $18,800, and 3uildings by $30,600. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Required: a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs. b. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). c. To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date. To verify the answers found in part (b), adjust Presidio's column of accounts for the journal entries in part (a) and then prepare a worksheet to consolidate the balance sheets of these two companies at the acquisition date. Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). Note: Input all amounts as positive values

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Tools for Business Decision Making

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

5th edition

9780470418239, 470239808, 9780470239803, 470418230, 978-1118128169

More Books

Students also viewed these Accounting questions

Question

Explain the causes of indiscipline.

Answered: 1 week ago

Question

What makes Zipcar an attractive employer for which to work?

Answered: 1 week ago

Question

Evaluate Figure 6-9; what other questions would you ask, and why?

Answered: 1 week ago