A230 Allrion Company acquires all of Deluxe Com; dissolves Dalixe, Book Fair Velues Vales Curent asso $60,000 § "60,000 Bulking 0,000 "50,000 ana 10,000 20,000, Trademark © 30,000 Good 15,000 2 abies (40,000) (40,000) Gammon stock (190,000) Reiainod eamings (35,000) 182. Prepare Allerton's entry to record is acquisition of Del ‘amounts: $145,000 and $110,000. (if no entry is required ‘account fold) pany s assets and fables for cash on January 1, 2018, and subsequent formally ‘tthe acnustion dat, the folowing book and far values wore avaliable forthe Deluxe Company acess lux ints accounting records assuming the following cash exchange for atransaction/event, select "No jour: try required!” in the first 2 2 [Current assets Bulking | ainen bapa parhane abies fe) (rare fs en i ‘cquisiton method entries for a merger Far vahe of consdoration transferred Farr vaue of net identifiable assote Excass to good Bargain purchase under acquiston method $0000 ive of consieratontanaared Fa vats ont enable nse ‘eneo Gain on bargain purchase 510,000, 9 recording 7 net identifiable assets acguired as the bass fo iston method employs the far valve of the net Ina bargain purchase, the acquisitor the acquisition, Because this basis excoods the amount p 3 reco combination to the general rule of using the fair value of the consideration transferred as the basis fr recording the Allerton recognizes a gain on bargain purchase, This s an exceptionerrarz020 2, ‘chapter 2 &3 in class practice ‘Award:25.00 points Problems? Adjust creit forall students putter | Fewer Quv qs sumer rr Ic i ok Valves ‘SafeData Corporation has the following oR and respective fa values on June 30, DomY A-PR EV 9E ans iperalow Than sfipndv PSH torage 6 a ey BO of) i oe, 38 Pecan Y : Le ee een abies (400,000) Who, tv Mic? 0 Sr, fee f ty ay Retained earnings deficit, 1/1 700,000 os ee on ‘a. What is the fir valve ofthe consideration transferred in this combination? '. How should the stock issuance cosis appear in Privacy First's postcombination financial stalements? «. How should Privacy First account forthe fee pad tothe investnent bank? ‘8 How does the issuance ofthese shares affect the stockholders equity accounts of Privacy First, the parent? ‘How s the fai value ofthe consideration transfered in the combination algeated among the assets acquired and the lables assumed? hf Prvacy Firsts stock nad boon ‘worth only $50 per share rather than $75, how would the consolidation of SafeData's assets and labltios have been affected? Complete this question by ent. ng your answers in the tabs below. Required A Requires B Required C Required D Required © | Required H How isthe fair value ofthe consideration transferred inthe combination allocated among the assets acquired and the liabilities assumed? 2 Conideration transferred] ‘$_ 1,530,009] Receivables ca) [Patented technology 700,000) 500,000] Ingones research and dvlopeni] ——s0om0o] | abit 7 (400,000)] 4.180,000] [ccd Explanation: |ntps:feannect.mheducation.comi/eonnecleztassignmentpreviewAssigrment him ?assignmentid=243476539&moduleld=9027319975 12rtz2020 ‘The fair value ofthe consideration includes Feirvalue of stockissued s Comingentperormance abigation Freie value of consideration ranstorrod 5 b. ‘Stock Issue costs reduce additional paictin capital chapter 2 &3 in class practice 1,500,000, 30.000 7,880,000 {business combination, det acqusion costs (uch as fees pid to nvestmont banks fr arranging the transaction) are recognized 28 expenses, é Tho par va of the 20,000 shares nsed i recorded as an increase of $20,000 inthe Common Stock account. The $74 tr value in ‘1088 of par value ($75 ~ $1) isan increase to addtional padsn capital of $1,480,000 ($74 » 20,000 shaves) h The far value of the consideration nsforred is now $1,030,000. This amount indicates a bargain purchase calculated as follows ae of consideration transfer $1,030,000 Receivables S 80,000 Peateniestechrology 700,000 ‘Customer relatonstips 500,000, Research and development asset 300,000 Uaoies (400,000) __+,160,000 Gain on beegain purcha 550,000 {he alos of SafeDala's assets and Fables woul! be recorded at fir value, but there would be no goodwil recognized and a gain on bargain purchase would be reported References eBook & Resources Worksheet Learning Objective: 02-04 Describe the valuation Principles ofthe acquisition ‘mothod, Difficulty: 3 Hard Learning Objective: 02-05, Determine the fa value of the consideration transfered for an acquisition and allocate that fair value to specific assets acquires (inetucing goodwal) and lables assumed orto a ‘gain on bargain purchase. Learning Objective: 02-080 Prepare an acquiring firm's joural entry to record the various related costs nwolved tna business combination LLeaming Objective: 02-08 Describe the accounting treatment for he various intangible assets often acquired in a business combination, hntps:/eannect.mheducation.com/cornectleztassignment/previowAssignment hi ?assignmentd=2434765398aduleld=302731397er12/2020 ‘chapter 2 83 n clase practice 3. sware:2500 points Problems? Adust re fora students Pas Following are selected account balar Inces from Penske Company and Stanza Corporation as of December 31, 2018: Penske Stanza Revenues $ (700,000) $ (400,000) Cost of goods sold 250,000, 100,000 Depreciation expense 450,000 200,000 Investment income Not given 0 Dividends declared 80,000 60,000 Retained earnings, 4/1/18 (600,000) (200,000) Current assets, 400,000 500,000 Copyrights 900,000 400,000 Royalty agreements 600,000 1,000,000, Investment in Stanza Not given 0 Liabilities (500,000) (1,380,000) ‘Common stock (600,000) ($20 par) (200,000) ($10 par) ‘Additional paid-in capital (150,000) (60,000) Note: Parentheses indicate a credit balance. On January 1, 2018, Penske acquired all of Stanza’s ot common stock. Penske also paid $10,000 in stock issuance cost @ six-year remaining life) have a $440,000 book value but a fair value of $560,000. a. As of December 31, 2018, what is the consolidated copyrights balance? b. For the year ending December 31, 2018, what is consolidated net income? €. As of December 31, 2018, what is the consolidated retained earnings balance? 4. As of December 31, 2018, what is the consolidated balance to be reported for goodwill? ‘a. _|Consolidated copyrights Consolidated net income 1,400,000] 380,000} /&.__| Consolidated retained eamings 1. | Consolidated goodwill Explanation: ‘Stanza acquisition fair value ($10,000 in stock issue costs reduce additional paid-in capital) Book value of subsidiary(1/1/18 stockholders" equity balances) Fair value in excess of book value Remaining Le $itps/lconnect.mheducaton conveonnecveztassigrment/previowAssignment.htm?assignmentid-2434765398moduleld=3827313075 utstanding stock for $680,000 fair value in cash and ts. AL the date of acquisition copyrights (with ‘Amortizations 181272020 ‘chapter 2 83 in class practice Excess fair value allocated to copyrights based on fair value 120,000 6 yrs, $ 20,000 Goodwill $80,000 indefinite ° Total $20,000 a Consolidated copyrights Penske (book value) $900,000 Stanza (book value) 400,000 Allocation (above) 120,000 Excess amortizations, 2018 (20,000) Total $1,400,000 b. Consolidated net income, 2018 Revenues (add book values) $ 1,100,000 Expenses: ‘Add book values $700,000 Excess amortizations 20,000 720,000 Consolidated net income $380,000 e Consolidated retained eamings, 12/31/18 Retained eamings 1/1/18 (Penske) ‘$600,000 ‘Net income 2018 (above) 380,000 Dividends declared 2018 (Penske) (80,000) Total ‘$900,000 Stanza's telained earings balance as of January 1, 2018, is not included because these operations occurred prior to the acquisition. Stanza's dividends were attributable to Penske and therefore are excluded because they are intra-entity in nature. References eBook & Resources. Worksheet Leaming Objective: (03-01 Recognize the complexities in preparing consolidated financial reports that emerge from the Passage of time. /tipssleannect.meducation.com/cornectleztassignment/preview Assignment him?assignmontid=243478539&modulek/=9927319975 2611212020 ‘chapter 2 83 in less practice 2-25 ‘Alison Corporation acquired ail of the outstanding voting stock of Mathias, Inc, on January 1, 2017 in exchange for $5,875,000 in cash, Alison Intends to mainian Mathias as a wholy owned subsliar. Both companies have December $1 acl youronde Alte sewiotor ca, Mathas's stockholders equity was $2,000,000 nciding relained warnings $1 500.000, 4, wara:25:00 points Problems? Adjust ced fora stuconts, ‘ithe acaustion date, Alison prepared the folowing far value alocaton schedule fr its newly acxuited sublday: Consideration transfered § 5.875.000, Matias sochhokers uly 2.000.000, Excess fa over beck value 3.675000 to unpatoned ectnotgy (Bear remaining te) $300,000 tbpalets (1-year emaing i) 2,500,000 {wincreate long-term deb (undervalue, S-yescemining ie) 100.000) _3.200.000 Good S_ 675,000 Postacquiston Alison employs tho equity method to account forts investment in Math ‘combination, Mathias reprts te flowing Income and dividends ‘During the two years folowing the business Income Dvidends oir $"een000 $25,000 2018 ‘80.000 * $0,000 No asset impairments have occured since the acquisition date {ncivdualfrancial statements for each company as of December 31, 2016, appear below. Parentheses indicate cred balances, Dnidonds deciared wore pais in tho sama porod, son Matias Income Statement Sales S$ (6400900) (3,900,000) Cost of goods sold “450,000 2.200.000 Depreeaton expence 'a75.000 2rr00 ‘Amavestion oxpenae ‘3,000 403000 Irerest expense, 55,000 60.000, Equity earnings in Mathias 196,000 ° Nt hoa $1,170,000) “¥(e80;000) Statement of Retained Eamings Fae Rotaned samnge 1/1 8 (6340000) (1,955,000) Natineome above) 1.470.000), (960,000) Dhidende declared 580,000 50,000 Retained earings 1201, $950,000, “§ (aa66.0007 Balance Sheet —_—S— aoe. Can $7300 $4300 ‘Accounts receivable 950,000, 25,000 invartory 4.700.000, ‘7e.000 Investment in Maes 50,000 ° Eine (et) 30.000 2052.00) Patents 85.00, 9 Unpatented technology 2328000, 1.450.000, Good 25000, 9 Total asses 3 76.650.000 “§ aaRm00 ‘Accounts payae FE eoocoy “Goa Longer debt, § (1000000) 1,200.00) ‘Gemmon stock (200,000), (00,000) Retaned earrings 1281 5850.000)__ 885.00 “eta iaeates end aquty 5(15650.000) “5 (4.655.000) Required ‘2 Determine Alison's December 31, 2018, Investment in Mathias balance, '. Prepare a worksheet fo determine the consolidated values tobe reported! on Alison's nancial statements. hitps:Iconnect. mheducation com/connectieztassignmentJpreviewAssignmenthm?assignmentld=243476538&moduleld=3627312075 19Explanation: Investment in Mathias: Consideration transfered a 1/117 Alison's eaulyn Mathias earings (net of amocizaton) 2017 ($420,000 ~ $330,000) 2010 ($960,000 ~ $330,000) Postacqusiion earings net of amortization Matin ivicends since acqustion Investment balance af 1201118 icons acquisiton date far ver book value smortzatons: ngatnts technology ($800,009 8 yaar) Patents ($2500,00 +10 years) ‘Langer cob ($100,000 5 years) ‘Annual excess fai over book vali smorizaon $5875.00 150,000 630,000 700,000 75,000 /~ 3~a380,000 ) ¢ ss 100,000 250,00 0.000) 5 300.000 ALLISON CORPORATION AND CONSOLIDATED SUBSIDIARY ‘Consolidation Worksho For YearEnding December $1, 2018 ‘courts Income Statoment owenvae Casto goods sold on expense ‘mertzaton expense leorestoxpaneo Eguty ening in Mates Notinome Stotement of Retained Eamings Retained saminge 1? Ntncome (above) Didends decor Retainod eorargs 1201, Balance Sheet Cen Pooounts receivable Invertry Invesinent Mathie Exupmene (nt) Parent Ungoenied technology (Conc Toll sete ‘Accounts payable Lengtsom debt ‘Common sock Retained earrings 12794 “oa iabites ar aquty Consolidation entries: {S} Giminaion of Matias stockholders’ equity January 1 balances and tne book: {i Alecaton of Mathias excess acqustion cai far veue over Door cen. () Elmination o parents equity in subsidian’s incon {(©) Elimination of into-antly dividend payment tion 1,400,000) “4500000 75.000 30.000, 35,000, (63000) 17.170,000), (s.940.000) (70.000) ‘0.000 1G.880.000) 15,000 50,000 4,700,000 6's80.000, 3,700,000 95.000, 2928,000 28,000 7850000 (600,000) (1.090.000) (ez000, "Teoro0n) {) sooey oo 50000) peo) ‘Ss000) (15650000) (08.00) 7189000 779860 oop Matas (8.200000) 19,0,000) "200,000 77000,000 ‘277.000 1152}000 109.000 (©) 380,000 ‘e300 ‘0,000, © — 2000 “be.ne0 630,000 (260,000) Ta7an00) (1.985.000) (8) 1,865,000 (40.000) ‘e0,000) (70000) 0,000 (©) soe00 _¢e,000) 865,000) 16,950,009) 143,00 218,000 225,000 1.175:000 738.000 285,000 © ©) — 50.000 (5) 2,485,000 ° 4) ai54s:000 “scan 2082,000 5,782,000 9 (4) 2.250.000 (©) 250000 2.088.000 ‘480000 4) © “Fon.000 fe) an000 ase toy ©) 675.000 4:300,500, 855,000 77,000,000, (20000) (620,000) (zn0000) (20000 (a) 80,000 (2.280.200) ConsoidationEnitos Coneaicatod Te re ie value porton of investment account. Uunamorized balance as of begining of year. {5} Beconmiton of curent year excess fai-vluo amortization ard dapreciaton expenses,27 Teta aad MACS Lasroce Mien fr. al PATA Tecinuteey aaaee / d ee C— al : fe ee : 7 2oyron Zi Ebr (Agr saul V oer — a bs. Geese pees) DP Dhve sang ca Div [pire Pecans ae, Teantiey Loot 1) PROT ayo LT pear JU CATénestexpoase. LOW