Question
In: Accounting
Patrio Corporation acquired 100 percent of Aloe Corporation’s common stock on December 31, 2019, for $280,000....
- Patrio Corporation acquired 100 percent of Aloe Corporation’s common stock on December 31, 2019, for $280,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
|
Item |
Patrio |
Aloe |
|
Corporation |
Corporation |
|
|
Cash |
$55,000 |
$48,000 |
|
Accounts Receivable |
83,000 |
110,000 |
|
Inventory |
310,000 |
167,000 |
|
Property & Plant (net) |
200,000 |
105,000 |
|
Investment in Aloe Corporation Stock |
280,000 |
|
|
Total Assets |
$928,000 |
$430,000 |
|
Accounts Payable |
$109,000 |
$43,000 |
|
Notes Payable |
235,000 |
90,000 |
|
Common Stock |
300,000 |
102,000 |
|
Retained Earnings |
284,000 |
195,000 |
|
Total Liabilities & Stockholders’ Equity |
$928,000 |
$430,000 |
At the date of the business combination, Aloe’s net assets and liabilities approximated fair value except for inventory, which had a fair value of $155,000, and Property & Plant (net), which had a fair value of $165,000.
Give the elimination entry or entries and prepare a consolidation balance sheet worksheet immediately following the business combination.
Solutions
Expert Solution
Balance Sheet is prepared along with the working notes wherever required.
Consolidated Balance Sheet of Patrio Corporation and its Subsidiary Aloe
as at December 31, 2019.
| S. No | Particulars | Working Note | Amount |
| A. | Assets | ||
| Cash (55,000 + 48,000) | 103,000 | ||
| Accounts Receivables (83,000 + 110,000) | 193,000 | ||
| Inventory (310,000 + 155,000) | 465,000 | ||
| Property and Plant ( 200,000 + 165,000) | 365,000 | ||
| Total | 11,26,000 | ||
| B. | Equity and Liabilities | ||
| Liabilities | |||
| Accounts Payable (109,000 + 43,000) | 152,000 | ||
| Notes Payable (235,000 + 90,000) | 325,000 | ||
| Equity | |||
| Common Stock | 300,000 | ||
| Retained Earnings | 284,000 | ||
| Capital Reserve | 3 | 65,000 | |
| Total | 11,26,000 |
Working Note:
1) Shareholding Pattern
Patrio Corporation's Share = 100%
2) Analysis of Retained Earnings of Subsidiary Company (Aloe):
| Particulars | Pre Acquisition Retained Earnings | Post Acquisition of Retained Earnings |
| A. Balance | 195,000 | - |
| Add: Revaluation Profit | 48,000 | - |
| Total | 2,43,000 | 0 |
| Patrio's Share (100%) | 243,000 | |
Revaluation Loss on Inventory = 167,000 - 155,000 = 12,000
Revaluation Profit on Property and Plant = 165,000 - 105,000 = 60000
Net Profit on Revaluation = 48,000
3) Calculation of Goodwill or Capital Reserve
A. Share in Share Capital(at Face Value) = 102,000
Less : Cost of Acquisition (Cost of Acquisition - Pre Acquisition Retained Earnings) (280,000 - 243,000) = 37,000
Capital Reserve = 65,000
ekkarill92 answered 1 year agoRelated Solutions
Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $150,000....
Blank Corporation acquired 100 percent of Faith Corporation’s
common stock on December 31, 20X2, for $150,000. Data from the
balance sheets of the two companies included the following amounts
as of the date of acquisition:
Item
Blank
Corporation
Faith
Corporation
Assets
Cash
$
65,000
$
18,000
Accounts Receivable
87,000
37,000
Inventory
110,000
60,000
Buildings & Equipment (net)
220,000
150,000
Investment in Faith Corporation Stock
150,000
Total Assets
$
632,000
$
265,000
Liabilities and Stockholders’
Equity
Accounts Payable
$
92,000...
Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $150,000....
Blank Corporation acquired 100 percent of Faith Corporation’s
common stock on December 31, 20X2, for $150,000. Data from the
balance sheets of the two companies included the following amounts
as of the date of acquisition:
Item
Blank
Corporation
Faith
Corporation
Assets
Cash
$
65,000
$
18,000
Accounts Receivable
87,000
37,000
Inventory
110,000
60,000
Buildings & Equipment (net)
220,000
150,000
Investment in Faith Corporation Stock
150,000
Total Assets
$
632,000
$
265,000
Liabilities and Stockholders’
Equity
Accounts Payable
$
92,000...
Blank Corporation acquired 100 percent of Faith Corporation’s common stock on December 31, 20X2, for $190,000....
Blank Corporation acquired 100 percent of Faith Corporation’s
common stock on December 31, 20X2, for $190,000. Data from the
balance sheets of the two companies included the following amounts
as of the date of acquisition:
Item
Blank
Faith
Corporation
Corporation
Assets
Cash
$
67,000
$
21,000
Accounts Receivable
82,000
39,000
Inventory
111,000
64,000
Buildings and Equipment
(net)
230,000
166,000
Investment in Faith
Corporation Stock
190,000
Total Assets
$
680,000
$
290,000
Liabilities and Stockholders’
Equity
Accounts Payable
$
90,000
$...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,700....
Phone Corporation acquired 70 percent of Smart Corporation’s
common stock on December 31, 20X4, for $98,700. At that date, the
fair value of the noncontrolling interest was $42,300. Data from
the balance sheets of the two companies included the following
amounts as of the date of acquisition: Phone Smart Item Corporation
Corporation Cash $ 67,300 $ 40,000 Accounts Receivable 102,000
62,000 Inventory 142,000 93,000 Land 67,000 43,000 Buildings &
Equipment 419,000 253,000 Less: Accumulated Depreciation (162,000 )
(78,000 ) Investment...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $102,200....
Phone Corporation acquired 70 percent of Smart Corporation’s
common stock on December 31, 20X4, for $102,200. At that date, the
fair value of the noncontrolling interest was $43,800. Data from
the balance sheets of the two companies included the following
amounts as of the date of acquisition:
Phone
Smart
Item
Corporation
Corporation
Cash
$
50,300
$
21,000
Accounts Receivable
90,000
44,000
Inventory
130,000
75,000
Land
60,000
30,000
Buildings & Equipment
410,000
250,000
Less: Accumulated Depreciation
(150,000
)
(80,000
)
Investment...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $97,300....
Phone Corporation acquired 70 percent of Smart Corporation’s
common stock on December 31, 20X4, for $97,300. At that date, the
fair value of the noncontrolling interest was $41,700. Data from
the balance sheets of the two companies included the following
amounts as of the date of acquisition:
Phone
Smart
Item
Corporation
Corporation
Cash
$
60,300
$
31,000
Accounts Receivable
99,000
46,000
Inventory
142,000
91,000
Land
71,000
41,000
Buildings & Equipment
427,000
261,000
Less: Accumulated Depreciation
(151,000
)
(75,000
)
Investment...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $95,900....
Phone Corporation acquired 70 percent of Smart Corporation’s
common stock on December 31, 20X4, for $95,900. At that date, the
fair value of the noncontrolling interest was $41,100. Data from
the balance sheets of the two companies included the following
amounts as of the date of acquisition:
Phone
Smart
Item
Corporation
Corporation
Cash
$
68,300
$
37,000
Accounts Receivable
96,000
57,000
Inventory
142,000
87,000
Land
77,000
31,000
Buildings & Equipment
421,000
257,000
Less: Accumulated Depreciation
(153,000
)
(76,000
)
Investment...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000....
Phone Corporation acquired 70 percent of Smart Corporation’s
common stock on December 31, 20X4, for $98,000. At that date, the
fair value of the noncontrolling interest was $42,000. Data from
the balance sheets of the two companies included the following
amounts as of the date of acquisition:
Phone
Smart
Item
Corporation
Corporation
Cash
$
62,300
$
21,000
Accounts Receivable
95,000
51,000
Inventory
136,000
90,000
Land
71,000
39,000
Buildings & Equipment
425,000
254,000
Less: Accumulated Depreciation
(162,000
)
(79,000
)
Investment...
On December 31, 2009, Add-On Company acquired 100 percent of the common shares of Venus Corporation...
On December 31, 2009, Add-On Company acquired 100 percent of the
common shares of Venus Corporation for $ 300,000. Information about
the Venus balance just before the acquisition is given here:
Cash and Accounts Receivable...............$ 35,000
Inventory
.................................................$75,000
Land
........................................................$100,000,
Buildings and Equipment (net) ................$220,000
Total Assets .........................................$
430,000
Accounts Payable ....................................$ 65,000
Bonds Payable ................................... $150,000
Common Stock
.........................................$100,000
Retained earnings ...................................$115,000
Total Liabilities and Stockholders'Equity$
430,000
At the date of the business combination, the net assets and
liabilities...
Bristle Corporation acquired 75 percent of Silver Corporation's common stock on December 31, 20X8, for $300,000....
Bristle Corporation acquired 75 percent of Silver Corporation's
common stock on December 31, 20X8, for $300,000. The fair value of
the noncontrolling interest at that date was determined to be
$100,000. Silver's balance sheet immediately before the combination
reflected the following balances:
Cash and Receivables$40,000
Inventory70,000
Land90,000
Buildings and Equipment (net) 250,000
Total Assets $450,000
Accounts Payable$30,000
Income Taxes Payable40,000
Bonds Payable100,000
Common Stock100,000
Retained Earnings 180,000
Total Liabilities and Stockholders'
Equity $450,000
A careful review of the fair value of Silver's assets and...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Jin is an accountant. Nuankae is a sous chef at a successful Spanish restaurant on E....
- In American Government and Politics Today and answer the following questions. 1. What are the differences...
- Is possible for term to be both vague and ambiguous? (explain)
- (Dill/Bromberg 31.2) a) Use the Flory-Huggins theory to estimate the number ν(1) of configurations of a...
- why the OSI model is important? and compare between TCP/IP and OSI model?
- Eric Johnson started the Johnson grocery Company after years of not being able to get fresh...
- On February 6, 2013, Danial Farris filed a claim against International Paper Company (IP), alleging that...
ADVERTISEMENT