Problem 2-1

The account balances for Staten Incorporated and Tacom Corporation on December 31, 2011 are given below:

	Staten Incorporated Book Values at 12/31/2011	Tacom Corporation Book Values at 12/31/2011	Tacom Corporation Fair Values at 12/31/2011
Cash	$ 250,000	$ 50,000	$ 50,000
Receivables	300,000	150,000	140,000
Inventory	450,000	200,000	240,000
Buildings net	200,000	150,000	190,000
Equipment net	900,000	600,000	700,000
Trademark			100,000
Accounts payable	200,000	100,000	100,000
Notes payable	1,000,000	450,000	450,000
Common stock	100,000	100,000
Additional paid-in capital	300,000	200,000
Retained earnings - 1/1/11	300,000	150,000
Revenues	700,000	450,000
Expenses	500,000	300,000

Staten purchased all the outstanding shares of Tacom on December 31, 2011 by issuing 60,000 shares at their $10 par value. Staten paid $10,000 in fees and $5,000 in share issuance costs. These transactions are not included in the account information provided. Required: Prepare the necessary journal entries in Statens books if Tacom is dissolved and Statens per share fair value is $15.

Problem 2-2 Use the information from problem 2-1 but assume that Tacom remains a separate legal entity. Required: Prepare the consolidated balance sheet for Staten Incorporated at December 31, 2011. Statens per share fair value is $15. Problem 2-3 Use the information from problem 2-2 but assume that Statens per share fair value is $14.