these questions very important for me, I am so thankful if you solve all of them(2 questions)
1. On July 1, 2008, Rose Company exchanged 18,000 of its $35 fair value ($10 par value) shares for 16,000 of the outstanding shares of Daisy Company. Rose paid direct acqusition costs of $20,000 and $50,000 in stock issuance costs. Two companies had the following balance sheets on July 1, 2008: Cash Rose Co. Daisy Co. Book Book Value Value $ $ 150,000 70,000 120,000 60,000 Inventory Land Buildings (net) Equipment (net) 100,000 300,000 330,000 40,000 120,000 110,000 TOTAL 1,000,000 400,000 60,000 180,000 400,000 Current Liabilities Common Stock - $10 par value Common Stock - $10 par value Retained Earnings 200,000 140,000 420,000 TOTAL 1,000,000 400,000 The following are fair values for Daisy's assets: Inventory $65,000, Land $100,000, Building $150,000, and Equipment $75,000. a) Record the investment in Daisy Company and any entry necessitated by the purchase. b) Prepare a consolidated balance sheet for July 1, 2008. 2. On January 1, 2009, Peterson Corporation exchanged $1,090,000 fair-value consideration for all of the outstanding voting stock of Santiago, Inc. At the acquisition date, Santiago had a book value equal to $950,000. Santiago's individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $240,000 with an estimated remaining life of six years. On December 31, 2009 each company submitted the following financial statements for consolidation. Income Statement Peterson Corp. Santiago, Inc. Revenues 535,000 495,000 Cost of goods sold (170,000) (155,000) Gain on purchase 100,000 Depreciation (125,000) (140,000) Equity earnings from Santiago 160,000 0 0 Net Income 500,000 200,000 Statement of Ret. Earnings Retained Earnings, 1/1 Net Income (above) Dividends paid Retained Eamings, 31/12 1,500,000 500,000 (200,000) 650,000 200,000 (50,000) 1,800,000 800,000 Balance Sheet Current Assets Investment in Santiago Trademarks Patented technology Equipment 190,000 1,300,000 100,000 300,000 610,000 300,000 0 200,000 400,000 300,000 Total assets 2,500,000 1,200,000 Liabilities Common stock Retained earnings, 31/12 165,000 535,000 1,800,000 100,000 300,000 800,000 Total liabilities and equity 2,500,000 1,200,000 Prepare necessary journal entries and consolidated worksheet using equity method. 1. On July 1, 2008, Rose Company exchanged 18,000 of its $35 fair value ($10 par value) shares for 16,000 of the outstanding shares of Daisy Company. Rose paid direct acqusition costs of $20,000 and $50,000 in stock issuance costs. Two companies had the following balance sheets on July 1, 2008: Cash Rose Co. Daisy Co. Book Book Value Value $ $ 150,000 70,000 120,000 60,000 Inventory Land Buildings (net) Equipment (net) 100,000 300,000 330,000 40,000 120,000 110,000 TOTAL 1,000,000 400,000 60,000 Current Liabilities Common Stock - $10 par value Common Stock - $10 par value Retained Earnings 180,000 400,000 200,000 140,000 420,000 TOTAL 1,000,000 400,000 The following are fair values for Daisy's assets: Inventory $65,000, Land $100,000, Building $150,000, and Equipment $75,000. a) Record the investment in Daisy Company and any entry necessitated by the purchase. b) Prepare a consolidated balance sheet for July 1, 2008. 2. On January 1, 2009, Peterson Corporation exchanged $1,090,000 fair-value consideration for all of the outstanding voting stock of Santiago, Inc. At the acquisition date, Santiago had a book value equal to $950,000. Santiago's individual assets and liabilities had fair values equal to their respective book values except for the patented technology account, which was undervalued by $240,000 with an estimated remaining life of six years. On December 31, 2009 each company submitted the following financial statements for consolidation. Income Statement Revenues Cost of goods sold Gain on purchase Depreciation Equity earnings from Santiago Peterson Corp. Santiago, Inc. 535,000 495,000 (170,000) (155,000) 100,000 0 (125,000) (140,000) 160,000 0 Net Income 500,000 200,000 Statement of Ret. Earnings 1,500,000 500,000 (200,000) 650,000 200,000 (50,000) Retained Earnings, 1/1 Net Income (above) Dividends paid Retained Earnings, 31/12 Balance Sheet 1,800,000 800,000 Current Assets Investment in Santiago Trademarks Patented technology Equipment 190,000 1,300,000 100,000 300,000 610,000 300,000 0 200,000 400,000 300,000 Total assets 2,500,000 1,200,000 Liabilities Common stock Retained earnings, 31/12 165,000 535,000 1,800,000 100,000 300,000 800,000 Total liabilities and equity 2,500,000 1,200,000 Prepare necessary journal entries and consolidated worksheet using equity method
