Please read the case carefully and do all the requirements, looking for the most complete and right answers for good tips $! thank you.

Consolidation Case - 2017 To: Joel R. Wilson, CPA Paddle-Up Inc. Accounting Department From: Paddle-Up Inc. Board of Directors - Chairperson Joel Wilson Date: January 23, 2017 RE: Business Acquisition - Stream Company As discussed in today's meeting, Paddle-Up Inc.'s Board of Directors has requested pro-forma financial statements for several acquisition scenarios of Stream Company. For the past several years Paddle-Up Inc.'s Executive Management Team had experienced continued pressure from their investors for their lack of growth (markets share, revenue, and profits). On January 2nd, 2017 the Chief Executive Officer, Chief Operating Officer, and the Chief financial Officer all resigned. Previous to the Executive Management Team's resignation, Paddle-Up Inc.'s Board of Directors were in discussions with Stream Company's Board of Directors about a possible acquisition. The combination of constant pressure from investors and learning that the Board had been in negotiations with Stream Company, without their knowledge, sparked the abrupt resignations on January 2 nd. Stream Company shareholders want cash for the sale of 100% of their company (via an Asset Acquisition). Paddle-Up Inc.'s Board of Directors prefers to buy 75% of Stream Company using a combination of cash and Paddle-Up shares (via a Stock Acquisition). The Board has requested that the accounting department provide a pro-forma balance sheet at date of acquisition (use January 1, 2017 balance sheet information for both companies) for the following two scenarios: 1. Purchase 100% of Stream Company; accounting for as an asset acquisition assuming a cash only payment of $120,000,000. 2. Purchase 75% of Stream Company; accounting for as a stock acquisition (consolidation) assuming consideration (payment) given is a combination of cash ($51,000,000) and Paddle-Up stock issuance (2,000,000 shares). The Board has also requested that the accounting department provide pro-forma consolidated financial statements (income statement, statement of retained earnings, and balance sheet) for the 75% stock acquisition scenario as of December 31, 2017 and December 31, 2018 (using the cost method). Finally, in addition to providing the pro-forma financial statements, the board would like you to write a two page memorandum that addresses the following: 1. Analysis of the two acquisition date scenarios (asset acquisition and stock acquisition). Include in the analysis a brief explanation of the accounting differences between asset and stock acquisitions. 2. Analysis of the consolidated financial statements as of 12/31/17 and 12/31/18. Include in the analysis why there is an additional workpaper entry (reciprocity) when completing the 12/31/18 consolidation workpaper and not in the 12/31/17 consolidation workpaper. 3. Recommendation in regards to several ethical questions included in a note received from the Paddle-Up Inc. acquisition team (Exhibit A). Consider whether the type of acquisition (asset or stock) impacts your evaluation. 2017 Joel R. Wilson. All Rights Reserved. 1 Consolidation Case - 2017 Joel R. Wilson, CPA 4. Analysis whether the stock acquisition of Stream Company is a good financial and strategic decision. I fully expect this request to take between 6 to 8 hours, assuming you are well versed on asset and stock acquisition accounting, which I expect is the case having an accounting degree from Metropolitan State University! If you have any questions, please contact my office (joel.wilson@metrostate.edu). Thank you, Joel Wilson ======================================================================== Report Requirement Detail (50 Points): A. (15 points) - Memorandum to the Board of Directors (2 pages). B. (5 points) - Asset acquisition balance sheet (date of acquisition). a. Goodwill calculation b. Journal entry c. Schedule showing the impact of the journal entry on Paddle-Up Inc.'s balance sheet to arrive at the post-asset acquisition balance sheet. C. (5 points) - Stock acquisition balance sheet (date of acquisition). a. Real entry b. CAD c. Workpaper entries in journal entry form d. Workpaper D. (12.5 points) - Stock acquisition 3-section workpaper as of 12/31/17 (cost method). a. Real entry b. Workpaper entries in journal entry form c. Workpaper E. (12.5 points) - Stock acquisition 3-section workpaper as of 12/31/18 (cost method). a. Real entry b. Workpaper entries in journal entry form c. Workpaper Notes: 1. Items B, C, D and E each must be presented independently on ONE PAGE (i.e. Do not combine requirement C answers with requirement D answers on the same page). 2. The entire report must be submitted as ONE WORD file. 3. All financial work must be prepared in EXCEL and then copied (copy/paste picture) into the ONE WORD document (one document for the entire case). 4. The completed project evaluation will include how well the material is presented (including adhering to the noted requirements). Supporting Data: The request memorandum (page 1) and the attached pages provide all the necessary information to complete the project. 2017 Joel R. Wilson. All Rights Reserved. 2 Consolidation Case - 2017 Joel R. Wilson, CPA Exhibit A - The Paddle-Up acquisition team discovered during their due diligence that Stream Company did not realize the following key facts: Stream Company management and board did not realize their patents and brands had significant value. Thus, they did not include these asset values in their own internal evaluation of the potential sale to Paddle-Up Inc. Stream Company management and board does not fully understand that more than 25% of their employees will be let go (fired) within 6 months of the acquisition. Stream Company management and board do not realize that their long-term customers will be faced with dramatic price increases to be implemented by Paddle-Up Inc. Financial Data: 2017 Joel R. Wilson. All Rights Reserved. 3 Consolidation Case - 2017 Joel R. Wilson, CPA Pro-Forma Financial Data: 2017 Joel R. Wilson. All Rights Reserved. 4 Consolidation Case - 2017 Joel R. Wilson, CPA Pro-Forma Financial Data: 2017 Joel R. Wilson. All Rights Reserved. 5