Illini Hoosier Consolidation HW - Contributed capital 91.0...

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Acquisition of controlling interest in a firm via common stock investment. Illini and Hoosier Electric Illini acquires control of Hoosier Electric Company through buying a controlling percentage of Hoosier common stock. Below are book balances and fair values on the date of the transaction (all in millions of $): 1/1/2011 1/1/2011 1/1/2011 Illini Hoosier Hoosier Assets Book Values Book Values Fair Values Cash 37.0 2.0 2.0 Accounts receivable, net 158.0 5.0 4.9 Inventories 221.0 10.0 12.0 Plant, property and equipment 260.0 60.0 Less accumulated depreciation (127.0) (20.0) Net Plant, property and equipment 133.0 40.0 39.0 Total assets 549.0 57.0 57.9 Liabilities and Shareowners’ Investment Accounts payable 133.0 1.0 1.0 Long-term debt 278.0 6.0 6.5 411.0 7.0 7.5 Shareowners’ investment
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Unformatted text preview: Contributed capital 91.0 35.0 Reinvested earnings (deficit) 47.0 15.0 Total shareowners’ investment 138.0 50.0 Total liabilities and shareowners’ investment 549.0 57.0 For both investments, also assume: (1) Illini owes Hoosier $1.2 million for past electric part purchases as of 1/1/2011; and (2) Hoosier has a separately identifiable and measurable internally-generated trademark with a fair value of $2.2 million. Assignment: Make a consolidated balance sheet for Illini as of 1/1/2011 under each assumption: (a) Illini purchases 100% of Hoosier stock for $56 million (raised through an Illini debt issue) (b) Illini purchases 75% of Hoosier stock for $42 million (raised through an Illini debt issue)...
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