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(Please answer how you got everything in part B, I'm having a hard time figuring it out. Thank you!!) Consolidated Balance Sheet Working Paper, Identifiable

(Please answer how you got everything in part B, I'm having a hard time figuring it out. Thank you!!)

Consolidated Balance Sheet Working Paper, Identifiable Intangibles, Goodwill

International Technology Inc. (ITI) acquires all of the voting stock of Global Outsourcing Corporation (GOC) on June 30, 2010. Amounts paid are as follows (in millions):

Cash consideration to the former shareholders of GOC $40
1,200,000 shares of new $1 par common stock issued 48
Registration fees on new stock issued, paid in cash 2.4
Outside legal and advisory services, paid in cash 4
Fair value of earnings contingency 1.6

The earnings contingency provides for a potential payout to the former shareholders of GOC at the end of the third year following acquisition. The balance sheets of both companies immediately prior to the acquisition are as follows. Fair values of GOC's assets and liabilities at the date of acquisition are also provided.

ITI GOC
Balance Sheets (in millions) Book Value Book Value Fair Value
Current assets $160 $8 $12
Property, plant and equipment, net 400 104 56
Intangible assets 1,040 16 24
Total assets $1,600 $128
Current liabilities $120 $16 $16
Long-term liabilities 960 80 82.4
Common stock, par 16 3.2
Additional paid-in capital 440 48
Retained earnings 80 (20)
Accumulated other comprehensive income (12) 2.4
Treasury stock (4) (1.6)
Total liabilities and equity $1,600 $128

The intangible assets reported above consist of patents and trademarks. GOC also has the following previously unreported intangible assets that meet FASB ASC Topic 805 requirements for asset recognition:

Fair Value
Advanced technology $4
Customer lists 20

(a) Prepare the journal entry or entries ITI makes to record the acquisition on its own books (in millions and enter all decimal places).

General Journal
Description Debit Credit
Investment in GOC Answerimage text in transcribed Answerimage text in transcribed
AnswerMerger expensesContingent consideration liabilityEquity in net income for GOCGoodwillGain on purchaseRegistration fees on stockimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed
Common stock Answerimage text in transcribed Answerimage text in transcribed
Additional paid-in capital Answerimage text in transcribed Answerimage text in transcribed
AnswerMerger expensesContingent consideration liabilityEquity in net income for GOCGoodwillGain on purchaseRegistration fees on stockimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed
Cash Answerimage text in transcribed Answerimage text in transcribed

(b) Prepare a working paper to consolidate the balance sheets of ITI and GOC at June 30, 2010.

Enter answers in millions and enter all decimal places. Remember to use negative signs with your credit balance answers in the Dr (Cr) columns.

Consolidation Working Paper
Accounts Taken From Books Eliminations
(in millions) ITI Dr (Cr) GOC Dr (Cr) Debit Credit Consolidated Balances Dr (Cr)
Current assets $Answerimage text in transcribed $Answerimage text in transcribed (R) $Answerimage text in transcribed $Answerimage text in transcribed
Property, plant and equipment, net Answerimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed (R) Answerimage text in transcribed
Investment in GOC Answerimage text in transcribed Answerimage text in transcribed (E) Answerimage text in transcribed
Answerimage text in transcribed (R)
Intangible assets Answerimage text in transcribed Answerimage text in transcribed (R) Answerimage text in transcribed Answerimage text in transcribed
Advanced technology -- -- (R) Answerimage text in transcribed Answerimage text in transcribed
Customer lists -- -- (R) Answerimage text in transcribed Answerimage text in transcribed
Goodwill -- -- (R) Answerimage text in transcribed Answerimage text in transcribed
Current liabilities Answerimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed
Long-term liabilities Answerimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed (R) Answerimage text in transcribed
Common stock, $1 par Answerimage text in transcribed Answerimage text in transcribed (E) Answerimage text in transcribed Answerimage text in transcribed
Additional paid-in capital Answerimage text in transcribed Answerimage text in transcribed (E) Answerimage text in transcribed Answerimage text in transcribed
Retained earnings Answerimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed (E) Answerimage text in transcribed
Accumulated other comprehensive income Answerimage text in transcribed Answerimage text in transcribed (E) Answerimage text in transcribed Answerimage text in transcribed

Incorrect

Treasury stock Answerimage text in transcribed Answerimage text in transcribed Answerimage text in transcribed (E) Answerimage text in transcribed
Total: $Answerimage text in transcribed $Answerimage text in transcribed $Answerimage text in transcribed $Answerimage text in transcribed $Answerimage text in transcribed

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