Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Padre Company Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 400,000 $ 120,000 $ 120,000 Receivables 220,000 300,000 300,000 Inventory 410,000 210,000 260,000 Land 600,000 130,000 110,000 Building and equipment (net) 600,000 270,000 330,000 Franchise agreements 220,000 190,000 220,000 Accounts payable (300,000) (120,000) (120,000) Accrued expenses (90,000) (30,000) (30,000) Long-term liabilities (900,000) (510,000) (510,000) Common stock—$20 par value (660,000) Common stock—$5 par value (210,000) Additional paid–in capital (70,000) (90,000) Retained earnings, 1/1 (390,000) (240,000) Revenues (960,000) (330,000) Expenses 920,000 310,000 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol’s outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs. Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.) Accounts Amounts Inventory Land Buildings and equipment Franchise agreements Goodwill Revenues Additional paid-in capital Expenses Retained earnings, 1/1 Retained earnings, 12/31

Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Padre Company Sol Company Book Values Book Values Fair Values 12/31 12/31 12/31 Cash $ 400,000 $ 120,000 $ 120,000 Receivables 220,000 300,000 300,000 Inventory 410,000 210,000 260,000 Land 600,000 130,000 110,000 Building and equipment (net) 600,000 270,000 330,000 Franchise agreements 220,000 190,000 220,000 Accounts payable (300,000) (120,000) (120,000) Accrued expenses (90,000) (30,000) (30,000) Long-term liabilities (900,000) (510,000) (510,000) Common stock—$20 par value (660,000) Common stock—$5 par value (210,000) Additional paid–in capital (70,000) (90,000) Retained earnings, 1/1 (390,000) (240,000) Revenues (960,000) (330,000) Expenses 920,000 310,000 Note: Parentheses indicate a credit balance. On December 31, Padre acquires Sol’s outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs. Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.) Accounts Amounts Inventory Land Buildings and equipment Franchise agreements Goodwill Revenues Additional paid-in capital Expenses Retained earnings, 1/1 Retained earnings, 12/31

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts.

	Padre Company	Sol Company
	Book Values	Book Values	Fair Values
	12/31	12/31	12/31
Cash		$	400,000	$	120,000	$	120,000
Receivables			220,000		300,000		300,000
Inventory			410,000		210,000		260,000
Land			600,000		130,000		110,000
Building and equipment (net)			600,000		270,000		330,000
Franchise agreements			220,000		190,000		220,000
Accounts payable			(300,000)		(120,000)		(120,000)
Accrued expenses			(90,000)		(30,000)		(30,000)
Long-term liabilities			(900,000)		(510,000)		(510,000)
Common stock—$20 par value			(660,000)
Common stock—$5 par value					(210,000)
Additional paid–in capital			(70,000)		(90,000)
Retained earnings, 1/1			(390,000)		(240,000)
Revenues			(960,000)		(330,000)
Expenses			920,000		310,000

Note: Parentheses indicate a credit balance.

On December 31, Padre acquires Sol’s outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs.

Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.)

Accounts	Amounts
Inventory
Land
Buildings and equipment
Franchise agreements
Goodwill
Revenues
Additional paid-in capital
Expenses
Retained earnings, 1/1
Retained earnings, 12/31

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