A. Liu Company acquires Heller, Inc., by issuing 30,000 shares of $1 par common stock with...

A. Liu Company acquires Heller, Inc., by issuing 30,000 shares of $1 par common stock with a market price of $22 per share on the acquisition date and paying $150,000 cash. The assets and liabilities on Heller’s balance sheet were valued at fair values except equipment that was undervalued by $225,000. There was also an unrecorded patent valued at $45,000, as well as an unrecorded trademark valued at $60,000. In addition, the agreement provided for additional consideration, valued at $50,000, if certain earnings targets were met.

The pre-acquisition balance sheets for the two companies at acquisition date are presented below.

Assets	Liu Company	Heller Inc.
Cash	$ 220,600.00	$ 25,400.00
Accounts Receivable	$ 125,000.00	$ 132,000.00
Inventory	$ 106,000.00	$ 201,000.00
Property, plant, & equipment	$ 2,003,500.00	$ 406,500.00
Total Assets	$ 2,455,100.00	$ 764,900.00
Accounts Payable	$ 40,500	$ 32,700
Salaries & Taxes Payable	$ 37,600.00	$ 45,900.00
Notes Payable	$ 510,100.00	$ 220,000.00
Common Stock	$ 230,000.00	$ 60,000.00
Additional paid-in Capital	$ 950,000.00	$ 106,500.00
Retained Earnings	$ 686,900.00	$ 299,800.00
Total Liabilities & Equity	$ 2,455,100.00	$ 764,900

1. At what amount is the investment recorded on Richland's books?

2. Compute the consolidated balance in Cash.

3. Compute consolidated common stock.

4. Compute consolidated additional paid-in capital.

5. What amount of goodwill was recorded in the acquisition?

6. Compute consolidated liabilities.

7. Compute consolidated property, plant & equipment.

8. Compute consolidated inventory.

9. Compute consolidated identifiable intangible assets.

10. What is consolidated retained earnings?

Expert Solution

ekkarill92 answered 1 year ago

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