On December 18, 2017, Stephanie Corporation acquired 100 percent of a Swiss company for 4.0 million Swiss francs (CHF), which is indicative of book and fair value. At the acquisition date, the exchange rate was $1.00 = CHF 1. On December 18, 2017, the book and fair values of the subsidiary’s assets and liabilities were: Cash CHF 805,000 Inventory 1,305,000 Property, plant & equipment 4,005,000 Notes payable (2,110,000 ) Stephanie prepares consolidated financial statements on December 31, 2017. By that date, the Swiss franc has appreciated to $1.10 = CHF 1. Because of the year-end holidays, no transactions took place prior to consolidation. Determine the translation adjustment to be reported on Stephanie’s December 31, 2017, consolidated balance sheet, assuming that the Swiss franc is the Swiss subsidiary’s functional currency. What is the economic relevance of this translation adjustment? Determine the remeasurement gain or loss to be reported in Stephanie’s 2017 consolidated net income, assuming that the U.S. dollar is the functional currency. What is the economic relevance of this remeasurement gain or loss?

Smith Company is acquired by Roan Corporation on July 1, 2015. Roan exchanges 60,000 shares of its $1 par stock, with a fair value of $18 per share, for the net assets of Smith Company.

Roan incurs the following costs as a result of this transaction:

Acquisiton costs................................................$25,000

Stock registration and issuance costs................10,000

Total costs.........................................................$35,000

The balance sheet of Smyth Company, on the day of the acquisition, is as follows:

Assets:

Cash............................................$100,000

Inventory........................................250,000

Property, plant, and equipment:

Land.....................$200,000

Buildings (net)........250,000

Equipment (net).....200,000..........650,000

Total assets...............................$1,000,000

Liabilities and Equity

Current liabilities.....$80,000

Bonds Payable........500,000.......$580,000

Stockholders' equity:

Common Stock......$200,000

Paid-in capital in excess of par...100,000

Retained earnings...120,000........420,000

Total Liabilities and equity.............$1,000,000

The appraised fair values as of July 1, 2015 is as follows:

Inventory................................$270,000

Equipment...............................220,000

Land........................................180,000

Buildings.................................300,000

Current liabilities.......................80,000

Bonds payable.........................425,000

Record the acquisition of Smyth Company on the books of Radar Corporation.

Swann Company sold a delivery truck on April 1, 2019. Swann had acquired the truck on January 1, 2015, for $39,500. At acquisition, Swann had estimated that the truck would have an estimated life of 5 years and a residual value of $4,000. Swann uses the straight-line method of depreciation. At December 31, 2018, the truck had a book value of $11,100.

Required:

Albuquerque, Inc., acquired 24,000 shares of Marmon Company several years ago for $780,000. At the acquisition date, Marmon reported a book value of $800,000, and Albuquerque assessed the fair value of the noncontrolling interest at $32,500. Any excess of acquisition-date fair value over book value was assigned to broadcast licenses with indefinite lives. Since the acquisition date and until this point, Marmon has issued no additional shares. No impairment has been recognized for the broadcast licenses.

At the present time, Marmon reports $820,000 as total stockholders’ equity, which is broken down as follows:

View the following as independent situations:

1. a. & b. Marmon sells 15,000 and 7,000 shares of previously unissued common stock to the public for $40 and $20 per share. Albuquerque purchased none of this stock. What journal entry should Albuquerque make to recognize the impact of this stock transaction? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

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