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The balance sheet of Parent Enterprises as at December 31 , Year 5 , is as follows: Effective January 1, Year 6, Parent proposes to
The balance sheet of Parent Enterprises as at December 31 , Year 5 , is as follows: Effective January 1, Year 6, Parent proposes to issue 90,500 common shares (currently trading at $20 per share) for all of the common shares of Subsid Industries. In determining the acquisition price, the management of Parent noted that Subsid Industries has unrecorded customer service contracts and directed its accounting staff to reflect this when recording the acquisition. An independent appraiser placed a value of $166,000 on this unrecorded intangible asset. Direct costs associated with the acquisition were as follows: The balance sheet of Subsid Industries as at December 31 , Year 5 , is as follows: The shareholders of Subsid accept Parent's offer on the proposed date. Subsid Industries is to be wound up after the sale. Required: (a) Calculate the Acquisition Differential and Goodwill amounts. (b) Prepare the adjustment journal entries of the worksheet. (c) Prepare Parent's January 1, Year 6, consolidated balance sheet after the proposed transaction occurred by using the worksheet approach
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