The Board of Directors of Art Innovations, Inc., has voted to acquire The Painter art gallery in Paris, France
Question;The;Board of Directors of Art Innovations, Inc., has voted to acquire The Painter;art gallery (Gallery 1 from your Week 3 case) in Paris, France. The;acquisition is made on January 1, 2013.;Art Innovations issues 22,000 of its $1 par value stock with a market;price of $10 per share on the date of acquisition to acquire a 100% interest in;The Painter. The Painter will retain;separate incorporation after the acquisition.;In addition, Art Innovators paid $10,000 to a business broker for;assistance in finding the acquisition and $2,000 in stock issuance costs.;The;Balance Sheets on the date of acquisition are shown below, along with the Fair;Market Values of the assets and liabilities of The Painter. Art Innovations is presented in U.S. dollars;and The Painter in Euros.;Art;Innovations, Inc.;Balance;Sheet;January;1, 2013;Assets;Cash;85,000;Receivables;45,000;Inventory;170,000;Fixed;Assets (net);192,000;Total;Assets;492,000;Liabilities and Equities;Liabilities;82,000;Common;Stock;50,000;Additional;Paid-In-Capital;45,000;Retained;Earnings (12/31/12);315,000;Total;Liabilities and Equity;492,000;The;Painter;Balance;Sheet;January;1, 2013;Assets;Book Value;Fair Market Value;Cash;44,000;44,000;Receivables;46,000;46,000;Inventory;58,000;58,000;Fixed;Assets (net);139,000;182,000;Total;Assets;287,000;330,000;Liabilities and Equities;Liabilities;176,000;176,000;Common;Stock;60,000;Retained;Earnings (12/31/12);51,000;Total;Liabilities and Equity;287,000;Relevant;Exchange Rates for the Euro (in U.S. dollars) are as follows;January 1, 2012.60;December 31, 2012.65;Weighted Average;2012.63;1. Translate The;Painter?s Balance Sheet and FMV into U.S. Dollars (remember to look back at;your Week 3 case to get translation numbers.;2. In General Journal;form, record the acquisition entry for Art Innovators, Inc. using the;acquisition method. Using that entry;update their January 1, 2013 Balance Sheet.;3. Prepare a;consolidation worksheet and a balance sheet for the date of acquisition for Art;Innovators, Inc.;4. Identify the;possible reasons why Art Innovators, Inc. would acquire an existing gallery;rather than starting their own in France.;5. Explain why Art;Innovators, Inc. would pay more than the FMV of the net assets and liabilities;to acquire The Painter.
Paper#39974 | Written in 18-Jul-2015Price : $28