a. Given the following acquisition-date balance sheets of the parent and subsidiary, at what amounts will each of the following be reported on the consolidated balance sheet? (see table numbered 1-7 to answer) Balance Sheet Parent Subsidiary Assets Cash $700,000 $200,000 Accounts receivable 300,000 400,000 Inventory 450,000 500,000 Equity investment 1,920,000 Property, plant and equipment (PPE), net 1,500,000 900,000 $4,870,000 $2,000,000 Liabilities and stockholders’ equity Accounts payable $150,000 $100,000 Accrued liabilities 180,000 200,000 Long-term liabilities 1,000,000 550,000 Common stock 140,000 100,000 APIC 2,000,000 150,000 Retained earnings 1,400,000 900,000 $4,870,000 $2,000,000 1. Accounts Receivable Answer 2. Equity Investment Answer 3. PPE, net Answer 4. Goodwill Answer 5. Common Stock Answer 6. APIC Answer 7. Retained Earnings Answer b. What intangible assets will be reported on the consolidated balance sheet and at what amounts? License Agreement Answer Customer List Answer Goodwill Answer
Assume that the parent company acquires its subsidiary by exchanging 80,000 shares of its Common Stock, with a fair value on the acquisition date of $24 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary’s assets and liabilities at an amount equaling their book values except for a building that is undervalued by $400,000, an unrecorded License Agreement with a fair value of $200,000, and an unrecorded Customer List owned by the subsidiary with a fair value of $100,000. Any further discrepancy between the purchase price and the book value of the subsidiary’s
a. Given the following acquisition-date balance sheets of the parent and subsidiary, at what amounts will each of the following be reported on the consolidated
| Balance Sheet | Parent | Subsidiary |
|---|---|---|
| Assets | ||
| Cash | $700,000 | $200,000 |
| 300,000 | 400,000 | |
| Inventory | 450,000 | 500,000 |
| Equity investment | 1,920,000 | |
| Property, plant and equipment (PPE), net | 1,500,000 | 900,000 |
| $4,870,000 | $2,000,000 | |
| Liabilities and stockholders’ equity | ||
| Accounts payable | $150,000 | $100,000 |
| Accrued liabilities | 180,000 | 200,000 |
| Long-term liabilities | 1,000,000 | 550,000 |
| Common stock | 140,000 | 100,000 |
| APIC | 2,000,000 | 150,000 |
| 1,400,000 | 900,000 | |
| $4,870,000 | $2,000,000 |
| 1. | Accounts Receivable | Answer
|
| 2. | Equity Investment | Answer
|
| 3. | PPE, net | Answer
|
| 4. | Answer
|
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| 5. | Common Stock | Answer
|
| 6. | APIC | Answer
|
| 7. | Retained Earnings | Answer
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b. What intangible assets will be reported on the consolidated balance sheet and at what amounts?
| License Agreement | Answer
|
| Customer List | Answer
|
| Goodwill | Answer
|
I need help walking through and figuring out each step on this question. Could someone give me a walkthrough of how you came up with each "Answer"?
a). Amounts will be reported on the consolidated balance sheet
|
1 |
Accounts Receivable | ($3,00,000+$4,00,000) = | $7,00,000 |
| 2 | Equity Investment | $0 | |
| 3 | PPE, net | ($1,500,000+$9,00,000+$4,00,000(Account receivable)) = | $2,800,000 |
| 4 | Good will | [$1,920,000-($1,00,000+$1,50,000+$9,00,000)-($2,00,000(License Agreement)+$1,00,000(Customer List)+$4,00,000(Account receivable))] | $70,000 |
| 5 | Common stock | (Given) | $1,40,000 |
| 6 | APIC | (Given) | $2,000,000 |
| 7 | Retained earnings | $4,870,000 | |
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