This assignment will be on Chapter $8-$ This assignment will be geared at accounting for and understanding the effect of an Acquisition on the Post acquisition Balance Sheet and Income Statement.

Assignment must be completed in Excel and including any supporting and supplemented information such as calculations etc.

I have created an excel format for the Acquistion $-$ PLEASE USE!!!!

Note illustrations for this assignment in the textbook: $8\mathrm{.}19.$ Effect of an Acquisition on the Post acquisition Balance Sheet and Income Statement.

Ormond Co$.$ acquired all of the outstanding common stock of Daytona Co$.$ on January $1,$ Year $1.$ Ormond Co$.$ gave shares of its common stock with a fair value of $$312$ million in exchange for $100\%$ of the Daytona Co$.$ common stock. Daytona Co$.$ will remain a legally separate entity after the exchange, but Ormond Co$.$ will prepare consolidated financial statements with Daytona Co$.$ each period. Exhibit $8\mathrm{.}25$ presents the balance sheets of Ormond Co$.$ and Daytona Co$.$ on January $1,$ Year $1,$ just after the acquisition. The following information applies to Daytona Co$.$:

The market value of Daytona Co$.$s fixed assets exceeds their book value by $$50$ million.

Daytona Co$.$ owns a patent with a market value of $$40$ million.

Daytona Co$.$ is a defendant in a lawsuit that it expects to settle during Year $1$ at a cost of $$25$ million. The firm carries no insurance against such lawsuits. If permitted, Ormond Co$.$ wants to establish an acquisition reserve for this lawsuit.

Daytona Co$.$ has an unrecognized and unfunded retirement health care benefits obligation totaling $$20$ million on January $1,$ Year $1.$

Exhibit $8\mathrm{.}25.$ Ormond Co$.$ and Daytona Co$.$ Balance Sheets on January $1,$ Year $1($amounts in millions$)($Problem $8\mathrm{.}19)$

Required

Prepare a consolidated balance sheet for Ormond Co$.$ and Daytona Co$.$ on January $1,$ Year $1.$ Ignore deferred tax effects. $($A consolidated worksheet is not required but recommended.$)$

Exhibit $8\mathrm{.}26$ presents income statements and balance sheets taken from the separate$-$company books at the end of Year $1.$ The following information applies to these companies:

The fixed assets of Daytona Co$.$ had an average remaining life of five years on January $1,$ Year $1.$ The firms use the straight$-$line depreciation method.

The patent of Daytona Co$.$ had a remaining life of $10$ years on January $1,$ Year $1.$

Daytona Co$.$ settled the lawsuit during Year $1$ and expects no further liability.

Daytona Co$.$ will amortize and fund its retirement health care benefits obligation over $20$ years. It included $$1$ million in operating expenses during Year $1$ related to amounts unrecognized and unfunded as of January $1,$ Year $1.$

The test for goodwill impairment indicates that no impairment charge is necessary for Year $1.$ Prepare a consolidated income statement for Year $1$ and a consolidated balance sheet on December $31,$ Year $1.($A consolidated worksheet is not required, but it will be illustrated in the solution.$)$

Exhibit $8\mathrm{.}26.$ Ormond Co$.$ and Daytona Co$.$ Income Statement and Balance Sheet for Year $1($in millions$)($Problem $8\mathrm{.}19)$