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Advanced Accounting: 440- Fundamentals of Advanced Accounting:

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Question;Q1. On June 30, 2013, Wisconsin, Inc., issued $300,000 in debt and 15,000 new shares of its $10 par value stock to Badger Company owners in exchange for all of the outstanding shares of that company. Wisconsin shares had a fair value of $40 per share. Prior to the combination, the financial statements for Wisconsin and Badger for the six-month period ending June 30, 2013, were as follows:Wisconsin BadgerRevenues $ (900,000 ) $ (300,000)Expenses 660,000 200,000Net income $(240,000 ) $ (100,000)Retained earnings, 1/1 $(800,000 ) $(200,000)Net income (240,000 ) (100,000)Dividends paid 90,000 0Retained earnings, 6/30 $(950,000 )$(300,000)Cash $ 80,000 $ 110,000Receivables and inventory 400,000 170,000Patented technology (net) 900,000 300,000Equipment (net) 700,000 600,000Total assets $ 2,080,000 $ 1,180,000Liabilities $ (500,000 ) $ (410,000)Common stock (360,000 ) (200,000)Additional paid-in capital (270,000 ) (270,000)Retained earnings (950,000 ) (300,000)Total liabilities and equities $(2,080,000 ) $(1,180,000)Note: Parentheses indicate a credit balance.Wisconsin also paid $30,000 to a broker for arranging the transaction. In addition, Wisconsin paid $40,000 in stock issuance costs. Badger?s equipment was actually worth $700,000, but its patented technology was valued at only $280,000.What are the consolidated balances for the following accounts? (Input all amounts as positive values.)Accounts Amountsa. Net income $b. Retained earnings, 1/1/13 $c. Patented technology $d. Goodwill $e. Liabilities $f. Common stock $g. Additional paid-in capital $Q2.The following book and fair values were available for Westmont Company as of March 1.Book Value Fair ValueInventory $ 630,000 $ 600,000 Land 750,000 990,000 Buildings 1,700,000 2,000,000 Customer relationships 0 800,000 Accounts payable (80,000 ) (80,000 )Common stock (2,000,000) Additional paid-in capital(500,000) Retained earnings 1/1 (360,000 ) Revenues (420,000 ) Expenses 280,000 Note: Parentheses indicate a credit balance.Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont?s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction.Prepare Arturo?s journal entry to record its acquisition of Westmont.General Journal Debit CreditTo record acquisition of Westmont Company. To record legal fees related to the combination. DR CRTo record payment of stock issuance costs. DR. CR

 

Paper#45034 | Written in 18-Jul-2015

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