On 1/1/2017, Cali Co. acquired all of Malibu's outstanding common stock by issuing 20,000 shares of its own $1 Par Common Stock. On the acquisition date Cali Co.'s stock actively traded at $23.50 per share. On the acquisition date, Malibu reported retained earnings of $230,000 and a total book value of $360,000. What would be the consolidated entry S and C for 12/31/17?

On 1/1/2017, Cali Co. acquired all of Malibu's outstanding common stock by issuing 20,000 shares of its own $1 Par Common Stock. On the acquisition date Cali Co.'s stock actively traded at $23.50 per share. On the acquisition date, Malibu reported retained earnings of $230,000 and a total book value of $360,000. What would be the consolidated entry S and C for 12/31/17?

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

See similar textbooks

Similar questions

On January 1, 2016, Prima Company issued 1,500 of its $20 par value common shares with a fair value of $50 per share in exchange for 2,000 outstanding common shares of Swatch Company in a purchase transaction. Registration costs amounted to $1,700 paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Prima Swatch Cash $ 73,000 $13,000 Accounts Receivable (net) 95,000 19,000 Inventory 58,000 25,000 Plant and Equipment (net) 95,000 43,000 Land 26,000 20,000 Total Assets $ 347,000 $ 120,000 Accounts Payable $ 66,000 16,000 Notes Payable 82,000 21,000 Common Stock, $20 par value 100,000 40,000 Other Contributed Capital 60,000 24,000 Retained Earnings 39,000 19,000 Total Liabilities and Equities…
prepare of the related journal entries. On 1 January 2017, FIBERBOATS acquired 100% of BELL Corporation. FIBERBOATS issued 50,000 shares of its BD0.600 par ordinary shares, with a market price of BD0.400 on the date the acquisition was announced and BD0.800 on the date the acquisition was completed, for all of BELL Corporation ordinary shares. The book value of net assets of BELL Corporation at the date of acquisition was BD10,000. On that date, the fair value of BELL Corporation assets and liabilities equalled their respective carrying amounts with the exception of property, plant and equipment (PPE) that exceeded its book value by BD120,000. The fair value of BELL’s identifiable intangibles (in-process research and development) is BD70,000. The in-process research and development will be amortized over 5 years.
Chapel Hill Company had common stock of $350,000 and retained earnings of $490,000. Blue Town Inc. had common stock of $700,000 and retained earnings of $980,000. On January 1, 2018, Blue Town issued 34,000 shares of common stock with a $12 par value and a $35 fair value for all of Chapel Hill Company's outstanding common stock. This combination was accounted for using the acquisition method. Immediately after the combination, what was the amount of total consolidated net assets?
Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2018 (credit balances indicated by parentheses). Michael acquired all of Aaron’s outstanding voting stock on January 1, 2014, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company’s stock actively traded at $23.50 per share.On the date of acquisition, Aaron reported retained earnings of $230,000 and a total book value of $360,000. At that time, its royalty agreements were undervalued by $60,000. This intangible was assumed to have a six-year remaining life with no residual value. Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books. Aaron declared and paid dividends in the same period.a. Using the preceding information, prepare a consolidation worksheet for these two companies as of December 31, 2018.b. Instead of the initial value method, assume now that Michael…
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…
On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz Company Cash $71,250 $13,190 Accounts receivable (net) 99,260 20,070 Inventory 63,300 26,980 Plant and equipment (net) 99,340 39,970 Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800 Notes payable 85,460 20,800 Common stock, $20 par value 108,400 36,400 Other contributed capital 58,280 23,800 Retained earnings 44,870 23,850 Total equities $361,140 $121,650 Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.…
Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2021 (credit balances indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2017, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $28.50 per share. Michael Company 12/31/21 $ (644,500) 287,250 129,300 (5,000) $ (232,950) $(1,046,000) (232,950) 90,000 $(1,188,950) 140,000 429,000 611,000 570,000 512,000 1,015,000 $3,277,000 $(988,050) (300,000) (500,000) (300,000) (1,188,950) $(3,277,000) Revenues Cost of goods sold Amortization expense Dividend income Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Cash Receivables Inventory Investment in Aaron Company Copyrights Royalty agreements Total assets Liabilities Preferred stock. Common stock Additional paid-in capital Retained earnings, 12/31/21 Total liabilities and…
Nascent, Inc., acquires 60 percent of Sea-Breeze Corporation for $414,000 cash on January 1, 2015. The remaining 40 percent of the Sea-Breeze shares traded near a total value of $276,000 both before and after the acquisition date. On January 1, 2015, Sea-Breeze had the following assets and liabilities:The companies’ financial statements for the year ending December 31, 2018, follow:Answer the following questions:a. How can the accountant determine that the parent has applied the initial value method?b. What is the annual excess amortization initially recognized in connection with this acquisition?c. If the parent had applied the equity method, what investment income would the parent have recorded in 2018?d. What amount should the parent report as retained earnings in its January 1, 2018, consolidated balance sheet?e. What is consolidated net income for 2018 and what amounts are attributable to the controlling and noncontrolling interests?f. Within consolidated statements at January 1,…
On January 1, 2015, Pub Corporation made a significant acquisition, purchasing 75 percent of SubCorporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation. Pub SubOther assets—net $5,845 $4500Investment in Sub—75% 3,640 —Expenses (including cost of sales) 5,285 800Dividends 600 300 $15370…
On January 1, 2015 ,Pub Corporation made a significant acquisition, purchasing 75 percent of SubCorporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation.…
On January 1, 2015 ,Pub Corporation made a significant acquisition, purchasing 75 percent of Sub Corporation's outstanding voting stock for a total of $4,200,000. Sub Corporation's stockholders'equity at that time was made up of the following components (all values in thousands):Capital stock with a par value of $10: $2,000Additional paid-in capital: $1200Retained earnings as of December 31, 2014: $1500Total stockholders' equity: $4700The surplus fair value of the net assets obtained from this acquisition was allocated as follows: 10percent to underappreciated inventory (which was subsequently sold in 2015), 40 percent tounderappreciated plant assets with a remaining useful life of eight years, and the remaining 50 percentto goodwill.Fast forward to December 31, 2019, and we have the comparative trial balances for both PubCorporation and Sub Corporation.…
Arther Corporation acquired all of the outstanding $10 par voting common stock of Trent Inc., on January 1, 2016, in exchange for 50,000 shares of its $10 par voting common stock. On December 31, 2015, the common stock of Arther had a closing market price of $15 per share on a national stock exchange. The retained earnings balance of Trent Inc., was $156,000 on the date of the acquisition. Both companies continued to operate as separate business entities maintaining separate accounting records with years ending December 31.On December 31, 2018, after year-end adjustments but before the nominal accounts were closed, the companies had the following condensed statements: (see attachment)Additional information is as follows: a. There have been no changes in the common stock and additional paid-in capital in excess of par accounts since the one necessitated in 2016 by Arther’s acquisition of Trent, Inc. b. At the acquisition date, the market value of Trent’s machinery exceeded book value by…