On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $310,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $24,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $9,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Items Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Presidio Company $ 75,000 354,000 Mason Company $ 38,800 380,000 90,000 229,000 246,000 253,000 476,000 274,000 174,000 50,400 (241,000) (41,400) (480,000) (310,000) (110,000) 0 0 (120,000) (360,000) (514,000) 0 (463,800) Note: Parentheses indicate a credit balance. Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $9,000, Land by $25,800, and Buildings by $32,200. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). Note: Input all amounts as positive values. Cash Receivables Inventory Land Buildings (net) Equipment (net) Investment in Mason Total assets Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities Consolidated Totals $ 0 $ Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values. Cash Receivables Inventory Accounts PRESIDIO COMPANY AND CONSOLIDATED SUBSIDIARY MASON Worksheet to prepare a Consolidated Balance Sheet Presidio Company January 1, 2024 Mason Company Consolidation Entries Consolidated Debit Credit Totals Land Buildings (net) Equipment (net) Investment in Mason Total assets $ 0 $ 0 $ 0 Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings, 1/1/24 Total liabilities and equities $ 0 $ 0 $ 0 0 $ Show less▲

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $310,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $24,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $9,000 in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Items Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock-$1 par value Common stock-$20 par value Additional paid-in capital Retained earnings, 1/1/24 Presidio Company $ 75,000 354,000 Mason Company $ 38,800 380,000 90,000 229,000 246,000 253,000 476,000 274,000 174,000 50,400 (241,000) (41,400) (480,000) (310,000) (110,000) 0 0 (120,000) (360,000) (514,000) 0 (463,800) Note: Parentheses indicate a credit balance. Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $9,000, Land by $25,800, and Buildings by $32,200. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary. Separately determine each individual amount that Presidio Company would report in its consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from part (a). Note: Input all amounts as positive values. Cash Receivables Inventory Land Buildings (net) Equipment (net) Investment in Mason Total assets Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings Total liabilities and equities Consolidated Totals $ 0 $ Note: For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values. Cash Receivables Inventory Accounts PRESIDIO COMPANY AND CONSOLIDATED SUBSIDIARY MASON Worksheet to prepare a Consolidated Balance Sheet Presidio Company January 1, 2024 Mason Company Consolidation Entries Consolidated Debit Credit Totals Land Buildings (net) Equipment (net) Investment in Mason Total assets $ 0 $ 0 $ 0 Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings, 1/1/24 Total liabilities and equities $ 0 $ 0 $ 0 0 $ Show less▲

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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