SCh02 - Student Name: Instructor Class: McGraw-Hill/Irwin...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Student Name: Instructor Class: McGraw-Hill/Irwin Problem 02-19 MARSHALL COMPANY Part a. Marshall and Tucker Consolidated Balances Marshall's acquisition of Tucker represents a bargain purchase because the fair value of the net assets acquired exceeds the fair value of the consideration transaction as follows: Fair value of consideration transferred $400,000 Fair value of net assets acquired 515,000 Gain on bargain purchase $115,000 Correct! Record 3 transactions that occurred to create the business combination: MARSHALL COMPANY General Journal Account Debit Credit Investment in Tucker 515,000 «- Correct! Long-Term Liabilities 200,000 Common Stock (par value) 20,000 Additional Paid-In Capital 180,000 Gain on Bargain Purchase 115,000 (To record liabilities and stock issued for Tucker acquisition at fair value) Combination Expenses 30,000 «- Correct! Cash 30,000 (To record payment of combination fees) Additional Paid-In Capital 12,000 «- Correct! Cash 12,000 (To record payment of stock issuance costs) Marshall's trial balance is adjusted for the transactions (as shown in the worksheet that follows). Consideration transferred at fair value $400,000 Book value (assets minus liabilities 460,000 or stockholders' equity) Book value in excess of consideration (60,000) Allocation to specific accounts based on fair value: Inventory 5,000 Land 20,000 Buildings 30,000 Bargain purchase (fair market value $(115,000) in excess of purchase price) Correct!
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Instructor Class: McGraw-Hill/Irwin Problem 02-19 Account Name Balance Explanation Cash $38,000 Add the two book values less acquisition costs. Receivables $360,000 Add the two book values. Inventory $505,000 Add the two book values, plus the fair value adjustment. Land $400,000 Add the two book values, plus the fair value adjustment. Buildings $670,000 Add the two book values, plus the fair value adjustment. Equipment $210,000 Add the two book values Total Assets $2,183,000 Summation of the above individual figures. Accounts Payable $190,000 Add the two book values. Long-term Liabilities $830,000 Add the two book values plus the debt incurred by the parent in acquiring the subsidiary. Common Stock $130,000 The parent's book value after stock issue to acquire the subsidiary. Additional Paid-In Capital $528,000 The parent's book value after the stock issue to acquire the subsidiary less the stock issue costs. Retained Earnings $505,000 Parent company balance less $30,000 in combination expenses plus $115,000 gain on bargain purchase.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/11/2011 for the course ACCT 5140 taught by Professor Wilnoor during the Spring '11 term at UCLA.

Page1 / 10

SCh02 - Student Name: Instructor Class: McGraw-Hill/Irwin...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online