Paid-in capital in excess of par, accounting homework help
Complete Problem 2-7 using the Week 02 Excel Template.
Using the data given in Problem 2-6, assume that Aron Company purchases 80% of the common stock of Shield Company for $320,000 cash.
The following comparative balance sheets are prepared for the two companies immediately after the purchase:
|
Aron |
Shield |
|
|---|---|---|
|
Cash |
$ 315,000 |
$ 40,000 |
|
Accounts receivable |
70,000 |
30,000 |
|
Inventory |
130,000 |
120,000 |
|
Investment in Shield Company |
320,000 |
|
|
Land |
50,000 |
35,000 |
|
Buildings and equipment |
350,000 |
230,000 |
|
Accumulated depreciation |
(100,000) |
(50,000) |
|
Copyrights |
40,000 |
10,000 |
|
Total assets |
$1,175,000 |
$415,000 |
|
Current liabilities |
$ 192,000 |
$ 65,000 |
|
Bonds payable |
100,000 |
|
|
Common stock ($10 par)—Aron |
100,000 |
|
|
Common stock ($5 par)—Shield |
50,000 |
|
|
Paid-in capital in excess of par |
250,000 |
70,000 |
|
Retained earnings |
633,000 |
130,000 |
|
Total liabilities and equity |
$1,175,000 |
$415,000 |
Required
- 1. Prepare the value analysis and the determination and distribution of excess schedule for the investment in Shield Company.
- 2. Complete a consolidated worksheet for Aron Company and its subsidiary Shield Company as of December 31, 2015.
Use the following information for Problems 2-8 through 2-11:
In an attempt to expand its operations, Palto Company acquires Saleen Company on January 1, 2015. Palto pays cash in exchange for the common stock of Saleen. On the date of acquisition, Saleen has the following balance sheet:
|
Saleen Company Balance Sheet January 1, 2015 |
|||
|---|---|---|---|
|
Assets |
Liabilities and Equity |
||
|
Accounts receivable |
$ 20,000 |
Current liabilities |
$ 40,000 |
|
Inventory |
50,000 |
Bonds payable |
100,000 |
|
Land |
40,000 |
Common stock ($1 par) |
10,000 |
|
Buildings |
200,000 |
Paid-in capital in excess of par |
90,000 |
|
Accumulated depreciation |
(50,000) |
Retained earnings |
60,000 |
|
Equipment |
60,000 |
||
|
Accumulated depreciation |
(20,000) |
|
|
|
Total assets |
$300,000 |
Total liabilities and equity |
$300,000 |
An appraisal provides the following fair values for assets:
|
Accounts receivable |
$ 20,000 |
|
Inventory |
60,000 |
|
Land |
80,000 |
|
Buildings |
320,000 |
|
Equipment |
60,000 |
|
Copyright |
50,000 |
Information from 2-6
On December 31, 2015, Aron Company purchases 100% of the common stock of Shield Company for $450,000 cash. On this date, any excess of cost over book value is attributed to accounts with fair values that differ from book values. These accounts of Shield Company have the following fair values:
|
Cash |
$ 40,000 |
|
Accounts receivable |
30,000 |
|
Inventory |
140,000 |
|
Land |
45,000 |
|
Buildings and equipment |
225,000 |
|
Copyrights |
25,000 |
|
Current liabilities |
65,000 |
|
Bonds payable |
105,000 |
The following comparative balance sheets are prepared for the two companies immediately after the purchase:
|
Aron |
Shield |
|
|---|---|---|
|
Cash |
$ 185,000 |
$ 40,000 |
|
Accounts receivable |
70,000 |
30,000 |
|
Inventory |
130,000 |
120,000 |
|
Investment in Shield Company |
450,000 |
|
|
Land |
50,000 |
35,000 |
|
Buildings and equipment |
350,000 |
230,000 |
|
Accumulated depreciation |
(100,000) |
(50,000) |
|
Copyrights |
40,000 |
10,000 |
|
Total assets |
$1,175,000 |
$415,000 |
|
Current liabilities |
$ 192,000 |
$ 65,000 |
|
Bonds payable |
100,000 |
|
|
Common stock ($10 par)—Aron |
100,000 |
|
|
Common stock ($5 par)—Shield |
50,000 |
|
|
Paid-in capital in excess of par |
250,000 |
70,000 |
|
Retained earnings |
633,000 |
130,000 |
|
Total liabilities and equity |
$1,175,000 |
$415,000 |
