On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: Park Strand...

On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows:

	Park		Strand
Current assets	$	74,500	$	16,050
Noncurrent assets		92,250		46,200
Total assets	$	166,750	$	62,250
Current liabilities	$	32,000	$	12,250
Long-term debt		51,750
Stockholders' equity		83,000		50,000
Total liabilities and equities	$	166,750	$	62,250

On January 2, Park borrowed $66,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered proportionate to Strand’s total fair value. The $66,000 debt is payable in 10 equal annual principal payments, plus interest, beginning December 31. The excess fair value of the investment over the underlying book value of the acquired net assets is allocated to inventory (60 percent) and to goodwill (40 percent).

(1) On a consolidated balance sheet as of January 2, what should be the amount for current assets?

(2) On a consolidated balance sheet as of January 2, what should be the amount for non current assets?

Solutions

Expert Solution

On a consolidated Balance sheet, each item will be added line by line.

Park and Strand corporation assets (current and non current both) will be added together in consolidated balance sheet. Only it will be increased by that amount which is allocated to Goodwill (non current) & Inventory (current) at the time of purchase of 80% common shares of Strand Corporation. This Goodwill & inventory amount will be $15,600 & $10,400 (calculation attached)

Hence in a Consolidated Balance Sheet,

1) Total value of Current Assets = 74,500+16,050+15,600 = 106,150

2) Total value of Non Current Assets = 92,250+46,200+10,400 = 148,850

Complete consolidated balance sheet is attached for better understanding.

Thanks,

ekkarill92 answered 3 weeks ago

Next > < Previous

Related Solutions

On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: Park Strand...

On January 1, Park Corporation and Strand Corporation had condensed balance sheets as follows: Park Strand Current assets $ 70,000 $ 20,000 Noncurrent assets 90,000 40,000 Total assets $ 160,000 $ 60,000 Current liabilities $ 30,000 $ 10,000 Long-term debt 50,000 0 Stockholders’ equity 80,000 50,000 Total liabilities and equities $ 160,000 $ 60,000 On January 2, Park borrowed $60,000 and used the proceeds to obtain 80 percent of the outstanding common shares of Strand. The acquisition price was considered...

On January 1, year 1, Polk Corp. and Strass Corp. had condensed balance sheets as follows:...

On January 1, year 1, Polk Corp. and Strass Corp. had condensed balance sheets as follows: Polk Strass Current assets $ 70,000 $ 20,000 Noncurrent assets 90,000 40,000 Total assets $160,000 $60,000 Current liabilities $ 30,000 $10,000 Long-term debt 50,000 -- Stockholders' equity 80,000 50,000 Total liabilities and stockholders' equity $160,000 $60,000 On January 2, year 1, Polk borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Strass. This debt is payable in ten...

The comparative condensed balance sheets of Gurley Corporation are presented below. GURLEY CORPORATION Comparative Condensed Balance...

The comparative condensed balance sheets of Gurley Corporation are presented below. GURLEY CORPORATION Comparative Condensed Balance Sheets December 31 2017 2016 Assets Current assets $ 73,800 $ 79,400 Property, plant, and equipment (net) 97,100 91,200 Intangibles 27,400 40,200 Total assets $198,300 $210,800 Liabilities and stockholders’ equity Current liabilities $ 40,400 $ 49,200 Long-term liabilities 143,200 148,000 Stockholders’ equity 14,700 13,600 Total liabilities and stockholders’ equity $198,300 $210,800 b) Prepare a vertical analysis of the balance sheet data for Gurley Corporation...

The following is a condensed version of the comparative balance sheets for Tamarisk Corporation for the...

The following is a condensed version of the comparative balance sheets for Tamarisk Corporation for the last two years at December 31. 2020 2019 Cash $ 336,300 $ 148,200 Accounts receivable 342,000 351,500 Investments 98,800 140,600 Equipment 566,200 456,000 Accumulated Depreciation-Equipment (201,400 ) (169,100 ) Current liabilities 254,600 286,900 Common stock 304,000 304,000 Retained earnings 583,300 336,300 Additional information: Investments were sold at a loss of $19,000; no equipment was sold; cash dividends paid were $57,000; and net income was...

The following is a condensed version of the comparative balance sheets for Shamrock Corporation for the...

The following is a condensed version of the comparative balance sheets for Shamrock Corporation for the last two years at December 31. 2020 2019 Cash $ 300,900 $ 132,600 Accounts receivable 306,000 314,500 Investments 88,400 125,800 Equipment 506,600 408,000 Accumulated Depreciation-Equipment (180,200 ) (151,300 ) Current liabilities 227,800 256,700 Common stock 272,000 272,000 Retained earnings 521,900 300,900 Additional information: Investments were sold at a loss of $17,000; no equipment was sold; cash dividends paid were $51,000; and net income was...

The following is a condensed version of the comparative balance sheets for Pronghorn Corporation for the...

The following is a condensed version of the comparative balance sheets for Pronghorn Corporation for the last two years at December 31. 2020 2019 Cash $ 230,100 $ 101,400 Accounts receivable 234,000 240,500 Investments 67,600 96,200 Equipment 387,400 312,000 Accumulated Depreciation-Equipment (137,800 ) (115,700 ) Current liabilities 174,200 196,300 Common stock 208,000 208,000 Retained earnings 399,100 230,100 Additional information: Investments were sold at a loss of $13,000; no equipment was sold; cash dividends paid were $39,000; and net income was...

Question 1 The comparative condensed balance sheets of Gurley Corporation are presented below. GURLEY CORPORATION Comparative...

Question 1 The comparative condensed balance sheets of Gurley Corporation are presented below. GURLEY CORPORATION Comparative Condensed Balance Sheets December 31 2017 2016 Assets Current assets $ 72,500 $ 79,200 Property, plant, and equipment (net) 99,000 90,200 Intangibles 25,600 41,800 Total assets $197,100 $211,200 Liabilities and stockholders’ equity Current liabilities $ 40,600 $ 49,000 Long-term liabilities 140,000 149,600 Stockholders’ equity 16,500 12,600 Total liabilities and stockholders’ equity $197,100 $211,200 (a) Prepare a horizontal analysis of the balance sheet data for...

Presented below is a condensed version of the comparative balance sheets for Grouper Corporation for the...

Presented below is a condensed version of the comparative balance sheets for Grouper Corporation for the last two years at December 31. 2017 2016 Cash $174,900 $46,600 Accounts receivable 116,900 75,800 Investments 71,300 93,900 Equipment 352,900 173,900 Accumulated depreciation—equipment (90,900) (66,100) Current liabilities 137,700 91,900 Common stock 138,300 63,700 Retained earnings 354,700 174,100 Additional information: Investments were sold at a gain of $9,100; no investments were purchased; no equipment was sold; cash dividends paid were $41,700; and net income was...

Presented below is a condensed version of the comparative balance sheets for Windsor Corporation for the...

Presented below is a condensed version of the comparative balance sheets for Windsor Corporation for the last two years at December 31. 2017 2016 Cash $ 309,750 $ 136,500 Accounts receivable 315,000 323,750 Investments 91,000 129,500 Equipment 521,500 420,000 Accumulated Depreciation-Equipment (185,500 ) (155,750 ) Current liabilities 234,500 264,250 Common stock 280,000 280,000 Retained earnings 537,250 309,750 Additional information: Investments were sold at a loss of $17,500; no equipment was sold; cash dividends paid were $52,500; and net income was...

Condensed balance sheet and income statement data for Landwehr Corporation appear below. LANDWEHR CORPORATION Balance Sheets...

Condensed balance sheet and income statement data for Landwehr Corporation appear below. LANDWEHR CORPORATION Balance Sheets December 31 2018 2017 2016 Cash $ 25,000 $ 20,000 $ 18,000 Accounts receivable (net) 50,000 45,000 48,000 Other current assets 90,000 95,000 64,000 Investments 75,000 70,000 45,000 Plant and equipment (net) 400,000 370,000 358,000 Total Assets $640,000 $600,000 $533,000 Current liabilities $ 75,000 $ 80,000 $ 70,000 Long-term debt 80,000 85,000 50,000 Common stock, $10 par 340,000 310,000 300,000 Retained earnings 145,000 125,000...

Subjects