Question
On June 10, 20X8, Tower Corporation acquired 100 percent of Brown Company's common stock. Summarized balance sheet data for the two companies immediately after the
On June 10, 20X8, Tower Corporation acquired 100 percent of Brown Company's common stock. Summarized balance sheet data for the two companies immediately after the stock acquisition are as follows:
| Tower Corp. | Brown Company | |||||||||||
| Item | Book Value | Fair Value | ||||||||||
| Cash | $ | 15,000 | $ | 5,000 | $ | 5,000 | ||||||
| Accounts Receivable | 36,000 | 16,000 | 16,000 | |||||||||
| Inventory | 91,000 | 22,000 | 27,000 | |||||||||
| Buildings & Equipment (net) | 126,000 | 59,000 | 79,000 | |||||||||
| Investment in Brown Stock | 131,000 | |||||||||||
| Total | $ | 399,000 | $ | 102,000 | $ | 127,000 | ||||||
| Accounts Payable | $ | 21,000 | $ | 3,000 | $ | 3,000 | ||||||
| Bonds Payable | 148,000 | 19,000 | 19,000 | |||||||||
| Common Stock | 47,000 | 16,000 | ||||||||||
| Retained Earnings | 183,000 | 64,000 | ||||||||||
| Total | $ | 399,000 | $ | 102,000 | $ | 22,000 | ||||||
REQUIRED:
Calculate the amount of Goodwill or Gain that resulted from the acquisition.
Prepare the workpaper eliminating journal entries.
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Financial Accounting
Authors: Charles T. Horngren, Jr Harrison, Walter T.
3rd Edition
0137419848, 978-0137419845
