On January 1^st. Year 6, X Company issued $656,000 worth of common stock plus a commitment to pay another $50,000 in 2 years if Ys sales were to grow 3% or more over the next 2 years for 100% of the assets and liabilities of Company Y.

Costs of negotiating the acquisition were:-

Costs of issuing shares$10,000

Legal and accounting fees.. 8,000

The balance sheets of the two companies at December 31^st. Year 5 are presented below:-

X.Y

Cash.$748,000.$20,800

Accounts receivable.. 168,000. 52,800

Goodwill600,000..100,000

Inventories 200,000.138,400

Plant.1,028,000.330,400

Accumulated Depreciation. (700,000)...(40,000)

Patents.. 208,000.. 52,800

TOTAL ASSETS. $2,252,000.$655,200

Current liabilities 328,000 102,000

Long-term debt 420,000 162,000

Common shares.. 712,000 200,000

Retained Earnings.. 792,000191,200

TOTAL LIABILITIES & OWNERS EQUITY.. $2,252,000 $655,200

The fair values of the net identifiable assets of Y Company on this date are as follows:-

Cash$20,800

Accounts receivable..44,000

Inventory178,000

Plant352,000

Trademarks 68,000

Patents.. 124,000

Current liabilities. 72,000

Long-term debt 148,000

Required:-

PART A(11MARKS)

i. Calculate the consolidated goodwill at the date of acquisition(6 marks)

ii. Prepare the eliminating entries at the date of acquisition.(8 marks) .

iii. Prepare the consolidated balance sheet at the date of acquisition(17 marks).