Easton Corporation purchased 100% of the common stock of Hopkins Inc. on January 2, 2017. Hopkins' balance sheet on January 2, 2017 was as follows:
|
Accounts receivable-net
|
$ 250,000
|
Current liabilities
|
$ 80,000
|
|
Inventory
|
340,000
|
Long term debt
|
170,000
|
|
Land
|
140,000
|
Common stock ($1 par)
|
50,000
|
|
Building-net
|
120,000
|
Paid-in capital
|
450,000
|
|
Equipment-net
|
90,000
|
Retained earnings
|
190,000
|
|
Total Assets
|
$940,000
|
Total Liabilities & Equity
|
$940,000
|
Fair values agree with book values except for inventory, land, and equipment that have fair values of $390,000, $150,000 and $75,000, respectively. Hopkins has unrecorded patent rights valued at $30,000.
Required:
a. Prepare a schedule to assign values to Hopkins' post-acquisition assets and liabilities assuming Easton paid $780,000 cash for the acquisition.
b. Prepare the consolidation entries for a January 2, 2017 consolidated balance sheet.