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In: Accounting

On January 1st 2020 The Deloit and Acme Companies had the following balance sheets: Deloit Acme...

On January 1st 2020 The Deloit and Acme Companies had the following balance sheets:

Deloit Acme
cash 2,000,000 50,000
accounts receivable 1,000,000 80,000
inventory 1,000,000 50,000
equipment 1,000,000 100,000
accumulated depreciation 500,000 50000
land 1,000,000 100,000
total assets 5,500,000 330,000
accounts payable 1,000,000 40,000
common stock $1 par 2,000,000 100,000
common stock 1,000,000 100,000
retained earnings 1,500,000 90,000

On January 2nd Deloit acquired of 90% the outstanding stock of Acme Company for 500,000 shares of common stock. On January 2nd Deloit stock was selling for $2 per share.

On January 1st the fair market value of Acme's land was $125,000; the fair market value of their inventory was $130,000; the fair market value of the equipment was $30,000; other assets and liabilities had a fair market value equal to book value.

A) Make the journal entry Deloit makes when it acquires the Acme stock

B) Make the journal entry Acme makes when its stock is acquired by Deloit

C) Prepare a consolidated balance sheet on Jan 2nd

D) Make the necessary worksheet entries needed to prepare the consolidated balance sheet

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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