Chapter 2: 22, 28, 32

Padre
22 Company Sol Company
Book Values Book Values Fair Value
12/31 12/31 12/31
Cash 400,000 120,000 120,000
Receivables 220,000 300,000 300,000
Inventory 410,000 210,000 260,000
Land 600,000 130,000 110,000
Building and equipment (net 600,000 270,000 330,000
Franchise agreements 220,000 190,000 220,000
Accounts payable (300,000) (120,000) (120,000)
Accrued expenses (90,000) (30,000) (30,000)
Long-term liabilities (900,000) (510,000) (510,000)
Common stock - $20 par val (660,000)
Common stock - $5 par value (210,000)
Additional paid-in capital (70,000) (90,000)
Retained earnings, 1/1 (390,000) (240,000)
Revenues (960,000) (330,000)
Expenses 920,000 310,000

Cash 360,000
Common stock 400,000
760,000
Book value 560,000
Excess fair over book value 200,000
vaue to specific assets
and liabilities
Inventory 50,000
Land (20,000)
Building and equipment (net) 60,000
Franchise agreements 30,000 120,000
Goodwill 80,000

Padre Company and Sol Company

Consolidated Worksheet
December 31, 20XX
Consolidation Entrie

Accounts Padre Sol Debit

Inventory 410,000 210,000 50,000
Land 600,000 130,000 -
Buildings and equipment 600,000 270,000 60,000
Franchise agreements 220,000 190,000 30,000
Goodwill - - 80,000
Revenues (960,000) (330,000) -
Additional paid-in capital (70,000) (90,000) 90,000
Expenses 920,000 310,000 20,000
 Retained earnings, 1/1 (390,000) (240,000) 240,000
Retained earnings, 12/31 - - 20,000

S
Common Stock 210,000
APIC 90,000
Retained Earnings 1/1 240,000
Retained Earnings 12/31 20,000
Investment in Sol Company 560,000

A
Inventory 50,000
Building and equipment (net 60,000
Franchise agreements 30,000
Goodwill 80,000
Land 20,000
Investment in Sol Company 200,000

Retained earnings, 12/31

(390,000)
(40,000)
(430,000)

28
1 Cash 145,000
FV of net assets acquired 120,000
Goodwill 25,000

Current Assets 60,000

Buildings 50,000
Land 20,000
Trademark 30,000
Goodwill 25,000
Liabilities 40,000
Cash 145,000

2 Cash 110,000
FV of net assets acquired 120,000
Gain on bargain purchase (10,000)

Current Assets 60,000

Buildings 50,000
Land 20,000
Trademark 30,000
Liabilities 40,000
Cash 110,000
Gain on bargain purchase 10,000

32 Fair value of securities issued by Pacifica 991,000

Present valye of contingent performance liabilities 62,500
Total fair value of consideration transferred 1,053,500

Investment in Seguros 1,053,500

Contingent performance liability 62,500
Common stock 250,000
APIC 741,000

Professional Services Expense 15,000

Cash 15,000

Consideration transferred at fair value 1,053,500

Book value 705,000
Excess fair over book value 348,500
Allocation of excess fair value to
Receivables and inventory (10,000)
Property, plant, and equipment 150,000
Research and development projects 100,000
Trademarks 40,000 280,000
Goodwill 68,500

Pacifica, Inc. and Seguros, Inc.

Consolidation Worksheet
For December 31, 2014

Accounts Pacifica Seguros Debit

Revenues (1,200,000)
Expenses 890,000
Net income (310,000)

Retained earnings, 1/1 (950,000)

Net income (310,000)
Dividends paid 90,000
Retained earnings, 12/31 (1,170,000)

Cash 95,000 85,000

Receivables and inventory 750,000 190,000
Property, plant, and equipm 1,400,000 450,000 150,000
Investment in Seguros 1,053,500

Research and development asset 100,000

Goodwill 68,500
Trademarks 300,000 160,000 40,000
Total assets 3,598,500 885,000

Liabilities (500,000) (180,000)

Contingent performance obl (62,500)
Common stock (650,000) (200,000) 200,000
Additional paid-in capital (1,216,000) (70,000) 70,000
Retained earnings (1,170,000) (435,000) 435,000
Total liabilities and equities (3,598,500) (885,000)

S
Common Stock 200,000
APIC 70,000
Retained Earnings 435,000
Investment in Seguros 705,000

A
Property, Plant, and Equipment 150,000
Trademarks 40,000
Research and Development Project 100,000
Goodwill 68,500
Receivables and Inventory 10,000
Investment in Seguros 348,500
mpany
t

onsolidation Entries
Consolidate
Credit d Totals
- 670,000
20,000 710,000
- 930,000
- 440,000
- 80,000
- (960,000)
(195,000) (265,000)
- 940,000
- (390,000)
- (430,000)
Inc.
t

Consolidate
Credit d Totals
(1,200,000)
890,000
(310,000)

(950,000)
(310,000)
90,000
(1,170,000)

180,000
10,000 930,000
2,000,000
705,000
348,500 -
100,000
68,500
500,000
3,778,500

(680,000)
(62,500)
(650,000)
(1,216,000)
(1,170,000)
(3,778,500)