Question
In: Accounting
Constructing the Consolidated Balance Sheet at Acquisition On January 1 of the current year, Healy Company...
Constructing the Consolidated Balance Sheet at Acquisition
On January 1 of the current year, Healy Company purchased all of
the common shares of Miller Company for $500,000 cash. Balance
sheets of the two firms immediately after the acquisition
follow:
During purchase negotiations, Miller's plant assets were appraised
at $425,000 and all of its remaining assets and liabilities were
appraised at values approximating their book values. Healy also
concluded that an additional $45,000 (for goodwill) demanded by
Miller's shareholders was warranted because Miller's earning power
was better than the industry average. Prepare the consolidating
adjustments and the consolidated balance sheet at acquisition.
| Healy | Miller | Consolidating adjustments | Consolidated | |
|---|---|---|---|---|
| Current assets | $1,700,000 | $120,000 | Answer | $Answer |
| Investment in Miller | 500,000 | - | Answer | Answer |
| Plant assets, net | 3,000,000 | 410,000 | Answer | Answer |
| Goodwill | - | - | Answer | Answer |
| Total assets | $5,200,000 | $530,000 | $Answer | |
| Liabilities | $ 700,000 | $ 90,000 | Answer | $Answer |
| Contributed capital | 3,500,000 | 400,000 | Answer
0.00 points out of 1.00 |
Answer
0.00 points out of 1.00 |
| Retained earnings | 1,000,000 | 40,000 | Answer | Answer
0.00 points out of 1.00 |
| Total liabilities & stockholders' equity | $5,200,000 | $530,000 |
$Answer |
Please answer all parts that say answer
Solutions
Expert Solution
| Healy | miller | consolidating adjustment | consolidated | |
| Current assets | $1,700,000 | $120,000 | 0 | $1,820,000 |
| Investment in miller | $5,00,000 | - | ($5,00,000) | 0 |
| Plant asset, net | $3,000,000 | $4,10,000 | $15,000 | $3,425,000 |
| Goodwill | - | - | $45,000 | $45,000 |
| Total assets | $5,200,000 | $5,30,000 | $5,290,000 | |
| Liabilities | $7,00,000 | $90,000 | 0 | $790,000 |
| Contributed capital | $3,500,000 | $4,00,000 | ($4,00,00) | $3,500,000 |
| Retained earnings | $1,000,000 | $40,000 | ($40,000) | $1,000,000 |
| Total liability and stock holder equity | $5,200,000 | $5,30,000 | 5,290,000 | |
Note:-
1)current assets = 1,700,000 + 120,000=1,820,000
2) Investments= adjustment of common share purchsed by healy company of miller company for $5,00,000
3) plant asset, net= $425000 - 410,000 = $15,000,
3,000,000 + 4,10,000 + 15,000 = $3,425,000
4) Goodwill - Healy concluded additional $45000 (for goodwill) demanded by Miller shareholder
5) Liabilities= $7,00,000 + 90,000 = 790,000
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