Tucker Company Book Value Marshall Company Book Value $ 60,000 270,000 360,000 200,000 420,000 160,000 (150,000) (430,000) (110,000) $ 20,000 90,000 Cash ... Receivables Inventory. Land.. 140,000 180,000 220,000 50,000 (40,000) (200,000) 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, 1/1/18. (120,000) (360,000) (420,000) -0- (340,000)
On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $200,000 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. Marshall paid $30,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,000 in connection with stock issuance costs.
Prior to these transactions, the balance sheets for the two companies were as follows:
In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the
a. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s
b. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.
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