On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $265,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $29,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $14,500 in connection with stock issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

Note: Parentheses indicate a credit balance.

In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $5,000, Land by $14,400, and Buildings by $25,000. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.

Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.

To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

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Required A

Required B

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Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.

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To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet.)

On January 1, 2017, Corgan Company acquired 80 percent of the outstanding voting stock of Smashing, Inc., for a total of $1,560,000 in cash and other consideration. At the acquisition date, Smashing had common stock of $900,000, retained earnings of $450,000, and a noncontrolling interest fair value of $390,000. Corgan attributed the excess of fair value over Smashing's book value to various covenants with a 20-year remaining life. Corgan uses the equity method to account for its investment in Smashing.

During the next two years, Smashing reported the following:

Corgan sells inventory to Smashing using a 60 percent markup on cost. At the end of 2017 and 2018, 40 percent of the current year purchases remain in Smashing's inventory.

A.Compute the equity method balance in Corgan's Investment in Smashing, Inc., account as of December 31, 2018.

B. Prepare the worksheet adjustments for the December 31, 2018, consolidation of Corgan and Smashing.

On January 1, 2019 Roberts Corporation acquired 100% of the outstanding voting stock of Williams Company in exchange for $726,000 cash. At that time, although Williams book value was $560,000, Roberts assessed Williams total business fair value as $726,000.

The book values of Williams individual assets and liabilities approximated their acquisition-date fair values except for the equipment account which was undervalued by $100,000. The undervalued equipment had a 5-year remaining life at the acquisition date. Any remaining excess fair value was attributed to goodwill.

Post-acquisition financial information for both companies on January 1, 2019 is shown below:

   Roberts    Williams

Cash 177,000 90,000

Accounts Receivable    356,000 120,000

Inventory 440,000 220,000

Investment in Williams Stock    726,000    0

Land    180,000 200,000   

Buildings and Equipment (net)    496,000 320,000

Total Assets:    $2,375,000    $950,000

Accounts Payable (120,000) (70,000)

Notes Payable (360,000) (320,000)

Common Stock    (610,000) (150,000)

Additional Paid-in Capital    (200,000) (90,000)

Retained Earnings, 1/1/19    (1,085,000) (320,000)

Total Liabilities and Stockholder's Equity    $2,375,000    $950,000

-Using the acquisition method, determine the allocation of the purchase price to the specific asset and liability accounts as of the date of the acquisition. (Round all calculations to the nearest whole dollar)

-Assuming that Roberts accounts for its investment in Williams using the equity method, prepare the worksheet entries needed on the date of acquisition.

-Finally, prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2019.

Protrade Corporation acquired 80 percent of the outstanding voting stock of Seacraft Company on January 1, 2017, for $488,000 in cash and other consideration. At the acquisition date, Protrade assessed Seacraft's identifiable assets and liabilities at a collective net fair value of $735,000 and the fair value of the 20 percent noncontrolling interest was $122,000. No excess fair value over book value amortization accompanied the acquisition.

The following selected account balances are from the individual financial records of these two companies as of December 31, 2018:

Each of the following problems is an independent situation:

• Assume that Protrade sells Seacraft inventory at a markup equal to 40 percent of cost. Intra-entity transfers were $111,000 in 2017 and $131,000 in 2018. Of this inventory, Seacraft retained and then sold $49,000 of the 2017 transfers in 2018 and held $63,000 of the 2018 transfers until 2019.
  Determine balances for the following items that would appear on consolidated financial statements for 2018:
• Assume that Seacraft sells inventory to Protrade at a markup equal to 40 percent of cost. Intra-entity transfers were $71,000 in 2017 and $101,000 in 2018. Of this inventory, $42,000 of the 2017 transfers were retained and then sold by Protrade in 2018, whereas $56,000 of the 2018 transfers were held until 2019.
  Determine balances for the following items that would appear on consolidated financial statements for 2018:
• Protrade sells Seacraft a building on January 1, 2017, for $122,000, although its book value was only $71,000 on this date. The building had a five-year remaining life and was to be depreciated using the straight-line method with no salvage value.
  Determine balances for the following items that would appear on consolidated financial statements for 2018:

• Determine balances for the following items that would appear on consolidated financial statements for 2018:

• Determine balances for the following items that would appear on consolidated financial statements for 2018:

On January 1, 2018, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $326,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $28,000 to accountants, lawyers, and brokers for assistance in the acquisition and another $13,000 in connection with stock issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

Note: Parentheses indicate a credit balance.

In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $7,250, Land by $20,200, and Buildings by $34,600. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.

1. Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. Other accounts will also need to be added or adjusted to reflect the journal entries Marshall prepared in recording the acquisition.
2. To verify the answers found in part (a), prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2018.

Tyler Company acquired all of Jasmine Company’s outstanding stock on January 1, 2016, for $274,700 in cash. Jasmine had a book value of only $204,900 on that date. However, equipment (having an eight-year remaining life) was undervalued by $71,200 on Jasmine’s financial records. A building with a 20-year remaining life was overvalued by $15,400. Subsequent to the acquisition, Jasmine reported the following:

In accounting for this investment, Tyler has used the equity method. Selected accounts taken from the financial records of these two companies as of December 31, 2018, follow:

Determine the following account balances as of December 31, 2018:

A. Investment in Jasmine Company

B. Equity in Subsidiary Earnings

C. Consolidated Net Income

D. Consolidated Equipment (net)

E. Consolidated Buildings (net)

F. Consolidated Goodwill (net)

G. Consolidated Common Stock

H. Consolidated Retained Earnings 12/31/18

Campbell Manufacturing Company was started on January 1, 2018, when it acquired $89,000 cash by issuing common stock. Campbell immediately purchased office furniture and manufacturing equipment costing $7,700 and $26,500, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of three years. The company paid $11,600 for salaries of administrative personnel and $15,100 for wages to production personnel. Finally, the company paid $14,300 for raw materials that were used to make inventory. All inventory was started and completed during the year. Campbell completed production on 4,500 units of product and sold 3,550 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required

Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.)

Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.)

Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.)

Determine the amount of net income that would appear on the 2018 income statement.

Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.

Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.

On January 1, 2016, Cayce Corporation acquired 100 percent of Simbel Company for consideration transferred with a fair value of $127,800. Cayce is a U.S.-based company headquartered in Buffalo, New York, and Simbel is in Cairo, Egypt. Cayce accounts for its investment in Simbel under the initial value method. Any excess of fair value of consideration transferred over book value is attributable to undervalued land on Simbel’s books. Simbel had no retained earnings at the date of acquisition. Following are the 2017 financial statements for the two operations. Information for Cayce and for Simbel is in U.S. dollars ($) and Egyptian pounds (£E), respectively.

Additional Information

• During 2016, the first year of joint operation, Simbel reported income of £E 166,000 earned evenly throughout the year. Simbel declared a dividend of £E 30,600 to Cayce on June 1 of that year. Simbel also declared the 2017 dividend on June 1.

• On December 9, 2017, Simbel classified a £E 10,300 expenditure as a rent expense, although this payment related to prepayment of rent for the first few months of 2018.

• The exchange rates for 1 £E are as follows:

Translate Simbel’s 2017 financial statements into U.S. dollars and prepare a consolidation worksheet for Cayce and its Egyptian subsidiary. Assume that the Egyptian pound is the subsidiary’s functional currency.

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• Translation Worksheet
• Consolidation Worksheet

Prepare a Translation worksheet. (Round "Exchange Rate" answers to 3 decimal places. Round your "Dollars" answers to the nearest whole number. Amounts to be deducted and negative amounts should be indicated with a minus sign.)

On December 31, Pacifica, Inc., acquired 100 percent of the voting stock of Seguros Company. Pacifica will maintain Seguros as a wholly owned subsidiary with its own legal and accounting identity. The consideration transferred to the owner of Seguros included 61,715 newly issued Pacifica common shares ($20 market value, $5 par value) and an agreement to pay an additional $130,000 cash if Seguros meets certain project completion goals by December 31 of the following year. Pacifica estimates a 50 percent probability that Seguros will be successful in meeting these goals and uses a 4 percent discount rate to represent the time value of money.

Immediately prior to the acquisition, the following data for both firms were available:

In addition, Pacifica assessed a research and development project under way at Seguros to have a fair value of $186,000. Although not yet recorded on its books, Pacifica paid legal fees of $22,700 in connection with the acquisition and $11,400 in stock issue costs.

a. Prepare Pacifica’s entries to account for the consideration transferred to the former owners of Seguros, the direct combination costs, and the stock issue and registration costs.

b.&c. Present a worksheet showing the postacquisition column of accounts for Pacifica and the consolidated balance sheet as of the acquisition date.