Problem:
Following are preacquistion financial balances for Parrot Company and Sun Company as of Dec 31. Also included are fair values for Sun Company accounts.
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Sun Company |
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Parrot Company Book Values 12/31 |
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Book Value 12/31 |
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Fair Value 12/31 |
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| Cash |
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$290,000 |
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$120,000 |
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$120,000 |
| Receivables |
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$220,000 |
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$300,000 |
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$300,000 |
| Inventory |
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$410,000 |
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$210,000 |
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$260,000 |
| Land |
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$600,000 |
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$130,000 |
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$110,000 |
| Building and equipment (net) |
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$600,000 |
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$270,000 |
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$330,000 |
| Franchise agreements |
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$220,000 |
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$190,000 |
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$220,000 |
| Accounts payable |
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($190,000) |
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($120,000) |
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($120,000) |
| Accounts expenses |
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($90,000) |
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($30,000) |
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($30,000) |
| Long-term liabilities |
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($900,000) |
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($510,000) |
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($510,000) |
| Common stock - $20 per value |
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($660,000) |
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| Common stock - $5 per value |
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($210,000) |
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| Additional paid-in capital |
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($70,000) |
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($90,000) |
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| Retained earnings, 1/1 |
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($390,000) |
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($240,000) |
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| Revenues |
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($960,000) |
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($330,000) |
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| Expenses |
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$920,000 |
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$310,000 |
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On December 31, Parrot acquires Sun's outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a value of $40 per share. Parrot paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs.
In the following situation, determine the value that would be shown in consolidated financial statements for each of the accounts listed.
Accounts
Inventory
Land
Buildings and equipment
Franchise agreements
Goodwill
Revenues
Additional paid-in capital
Expenses
Retained earnings, 1/1