On July 1, 20X1, Pushway Corporation issued 100,000 shares of common stock in exchange for all of Stroker Company’s common stock. The Pushway stock issued had a market value of $500,000 on the date of the exchange. Following are the July 1, 20X1, pre-acquisition balance sheets of Pushway and Stroker, plus fair value information for Stroker’s assets and liabilities. Stroker PushwayBook ValueFair ValueAssets Current assets$300,000 $100,000 $100,000 Long-term assets 600,000 400,000 470,000 Total assets$900,000 $500,000 $570,000 Liabilities Current liabilities$200,000 $50,000 $50,000 Long-term liabilities 250,000 100,000 120,000 Total liabilities 450,000 150,000 $170,000 Stockholders' equity Common stock 300,000 250,000 Retained earnings 150,000 100,000 Total stockholders' equity 450,000 350,000 Total liabilities and equity$900,000 $500,000 Required:Provide the journal entry Pushway recorded for the acquisition of Stroker, assuming Pushway used the acquisition method.What amount will be shown on the July 1, 20X1, consolidated balance sheet for the following:Total assetsTotal liabilitiesTotal equityNow assume this transaction had been completed prior to the elimination of poolings of interest, and that the pooling method had been used to record the acquisition. Redo requirements 1 and 2.

Acquisition Method Vs. Pooling of Interest Method:- Acquisition method is a method of accounting…

Answered: On July 1, 20X1, Pushway Corporation…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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On July 1, 20X1, Pushway Corporation issued 100,000 shares of common stock in exchange for all of Stroker Company’s common stock. The Pushway stock issued had a market value of $500,000 on the date of the exchange. Following are the July 1, 20X1, pre-acquisition balance sheets of Pushway and Stroker, plus fair value information for Stroker’s assets and liabilities.

	Stroker
	Pushway	Book Value	Fair Value
Assets
Current assets	$	300,000		$	100,000	$	100,000
Long-term assets		600,000			400,000		470,000
Total assets	$	900,000		$	500,000	$	570,000
Liabilities
Current liabilities	$	200,000		$	50,000	$	50,000
Long-term liabilities		250,000			100,000		120,000
Total liabilities		450,000			150,000	$	170,000
Stockholders' equity
Common stock		300,000			250,000
Retained earnings		150,000			100,000
Total stockholders' equity		450,000			350,000
Total liabilities and equity	$	900,000		$	500,000

Required:

Provide the journal entry Pushway recorded for the acquisition of Stroker, assuming Pushway used the acquisition method.
What amount will be shown on the July 1, 20X1, consolidated balance sheet for the following:

Total assets
Total liabilities
Total equity

Now assume this transaction had been completed prior to the elimination of poolings of interest, and that the pooling method had been used to record the acquisition. Redo requirements 1 and 2.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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What amount will be shown on the July 1, 20X1, consolidated balance sheet for the following:

Total equity

Now assume this transaction had been completed prior to the elimination of poolings of interest, and that the pooling method had been used to record the acquisition. Redo requirements 1 and 2:

Total assets
Total liabilities
Total equity

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