Problem
Consolidated Balance Sheet Working Paper, Bargain Gain, Special Issues
Packard Industries acquires all of the stock of Steamobile Company for $20 million in cash, and reports the acquisition as a stock acquisition on its own books. The balance sheet accounts of Packard and Steamobile, immediately prior to the acquisition, are as follows (in thousands):
|
|
Packard
|
Steamobile
|
|
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(in thousands)
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Book Value
Dr (Cr)
|
Book Value
Dr (Cr)
|
Fair Value
Dr (Cr)
|
|
Current assets
|
$35,000
|
$5,000
|
$3,000
|
|
Fixed assets
|
500,000
|
150,000
|
140,000
|
|
Accumulated depreciation
|
(160,000)
|
(40,000)
|
--
|
|
Goodwill
|
--
|
35,000
|
--
|
|
Liabilities
|
(215,000)
|
(120,000)
|
(121,000)
|
|
Capital stock
|
(90,000)
|
(35,000)
|
|
|
Retained earnings
|
(70,500)
|
5,800
|
|
|
Accumulated other comprehensive income
|
500
|
(800)
|
|
|
Total
|
$0
|
$0
|
|
Steamobile has previously unreported identifiable intangibles with a fair value of $6 million that are separately capitalized per ASC Topic 805.
1. Prepare a schedule calculating the excess of Steamobile's book value over acquisition cost, its allocation to Steamobile's identifiable net assets, and the amount of the bargain gain.
2. Prepare a consolidation working paper to consolidate Packard and Steamobile at the date of acquisition.