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In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 .... Palto Company Balance Sheet January 1, 2015 Assets Liabilities and Equity $ 161,000 65,000 Cash $ 80,000 200,000 20,000 180,000 546,000 Current liabilities Bonds payable Common stock ($1 par) . Paid-in capital in excess of par Retained earnings. Accounts receivable Inventory Investment in Saleen 80,000 400,000 Land. Buildings Accumulated depreciation Equipment Accumulated depreciation 100,000 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. . Total liabilities and equity $1,026,000

In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 .... Palto Company Balance Sheet January 1, 2015 Assets Liabilities and Equity $ 161,000 65,000 Cash $ 80,000 200,000 20,000 180,000 546,000 Current liabilities Bonds payable Common stock ($1 par) . Paid-in capital in excess of par Retained earnings. Accounts receivable Inventory Investment in Saleen 80,000 400,000 Land. Buildings Accumulated depreciation Equipment Accumulated depreciation 100,000 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. . Total liabilities and equity $1,026,000

Financial Accounting
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 1E: Parilo Company acquired 170,000 of Makofske Co., 5% bonds on May 1, 2016, at their face amount....
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Use the preceding information for Palto’s purchase of Saleen common stock. Assume Palto purchases 80% of the Saleen common stock for $400,000 cash. The shares of the noncontrolling interest have a fair value of $46 each. Palto has the following balance sheet immediately after the purchase:

1. Prepare the value analysis schedule and the determination and distribution of excess schedule for the investment in Saleen.
2. Complete a consolidated worksheet for Palto Company and its subsidiary Saleen Company as of January 1, 2015.

In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 ....
Transcribed Image Text:In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet: Saleen Company Balance Sheet January 1,2015 Assets Liabilities and Equity $ 20,000 Current liabilities . 50,000 Bonds payable ..... 40,000 Common stock ($1 par). . 200,000 Paidin capital in excess of par ... (50,000) Retained earnings .. 60,000 Accounts receivable $ 40,000 ... Inventory . Land...... 100,000 10,000 90,000 Buildings .... Accumulated depreciation Equipment . Accumulated depreciation 60,000 (20,000) $300,000 Total assets.. Total liabilities and equity $300,000 An appraisal provides the following fair values for assets: $ 20,000 60,000 80,000 320,000 60,000 Accounts receivable Inventory . Land. ... Buildings Equipment Copyright .. 50,000 ....
Palto Company Balance Sheet January 1, 2015 Assets Liabilities and Equity $ 161,000 65,000 Cash $ 80,000 200,000 20,000 180,000 546,000 Current liabilities Bonds payable Common stock ($1 par) . Paid-in capital in excess of par Retained earnings. Accounts receivable Inventory Investment in Saleen 80,000 400,000 Land. Buildings Accumulated depreciation Equipment Accumulated depreciation 100,000 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. . Total liabilities and equity $1,026,000
Transcribed Image Text:Palto Company Balance Sheet January 1, 2015 Assets Liabilities and Equity $ 161,000 65,000 Cash $ 80,000 200,000 20,000 180,000 546,000 Current liabilities Bonds payable Common stock ($1 par) . Paid-in capital in excess of par Retained earnings. Accounts receivable Inventory Investment in Saleen 80,000 400,000 Land. Buildings Accumulated depreciation Equipment Accumulated depreciation 100,000 250,000 (80,000) 90,000 (40,000) $1,026,000 Total assets. . Total liabilities and equity $1,026,000
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