Question

Pool Industries paid $540,000 to purchase 75% of the outstanding stock of Swimmin Corporation, on December 31, 2014. Any excess fair value over the identified assets and liabilities is attributed to goodwill. The following year-end information was available just before the purchase:

                                                                                  Pool            Swimmin            Swimmin

                                                                                 Book                     Book                       Fair

                                                                                Value                   Value                   Value

Cash                                                                  $756,000                 $80,000                $80,000

Accounts Receivable                                       260,000                 152,000                152,000

Inventory                                                           480,000                 100,000                120,000

Land                                                                    440,000                 160,000                140,000

Plant and equipment-net                            1,320,000                 400,000                430,000

                                                                        $3,256,000              $892,000              $922,000

Accounts Payable                                          $880,000                 $22,000                $22,000

Bonds Payable                                                  936,000                 200,000                180,000

Capital stock, $10 par value                          400,000

Capital stock, $15 par value                                                        450,000

Additional paid-in capital                             400,000                160,000

Retained earnings                                            640,000                  60,000

                                                                        $3,256,000              $892,000

Using the data provided above, assume that Pool decided rather than paying $540,000 cash, Pool issued 10,000 shares of their own stock to the owners of Swimmin. At the time of issue, the $10 par value stock had a market value of $60 per share.

Required: Prepare Pool's consolidated balance sheet on December 31, 2014.

Answer 1

Consolidated Balance Sheet
As on December 31,2014	Amount $
Assets
Cash	836,000	=756000+80000
Accounts Receivable	412,000	=260000+152000
Inventory	600,000	=480000+120000
Land	580,000	=440000+140000
Plant & Equipment , Net	1,750,000	=1320000+430000
Goodwill	420,000
Total Assets	4,598,000
Liabilities & Stockholder's Equity
Accounts Payable	902,000	=880000+22000
Bonds Payable	1,116,000	=936000+180000
Capital Stock . $10 Par Value	500,000	=400000+(10000*10)
Additional paid in capital	900,000	=400000+(10000*50)
Retained earnings	640,000
Non-controlling Interest	540,000
Total Liabilities & Stockholder's Equity	4,598,000
Working
	Amount $
Purchase Consideration	600,000
(10,000 x 60 )
Add: Non-Controlling Interest	540,000
(720,000 x 75% )
Less: Net Assets at Fair value	-720,000
(922,000 - 22,000 - 180,000 )
Goodwill	420,000