B-09.10 Problem

B-09.10 Problem - value and do not reflect any purchase...

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B-09.10 Parrot Corporation bought all of the stock of Sparrow Corporation from its existing shareholders on January 1, 20X6. Parrot paid Sparrow's shareholders a total of $5,000,000, which was $2,000,000 in excess of the recorded stockholders' equity of Sparrow. Further, the recorded values for each of the assets and liabilities of Sparrow were approximately equal to their estimated fair values, with the exception of land which had a fair value of $800,000. Any additional purchase differential not assigned to land is attributable to goodwill. Following is a listing of the separate assets and liabilities of each company, immediately following the acquisition. The accounts of Sparrow are reported at their book
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Unformatted text preview: value and do not reflect any purchase differential allocation. Parrot Sparrow Consolidated Cash $ 1,450,000 $ 160,000 Accounts Receivable 430,000 335,000 Inventory 850,000 725,000 Investment in Sparrow 5,000,000 - Land 550,000 500,000 Building and equipment (net) 1,700,000 2,530,000 - $ 9,980,000 $ 4,250,000 $ - Accounts Payable $ 460,000 $ 450,000 Notes Payable 1,700,000 800,000 Common Stock 2,530,000 1,000,000 Retained Earnings 5,290,000 2,000,000 - $ 9,980,000 $ 4,250,000 $ - Complete the "Consolidated" column to show how these accounts would appear in the consolidated balance sheet for Parrot and its subsidiary. You will need to add an additional row for the goodwill....
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