100% purchase, goodwill, consolidated balance sheet. On July 1, 20X6, Rose Company exchanged 18,000 of its $35 fair value ($10 par value) shares for all the outstanding shares of Daisy Company. Rose paid direct acquisition costs of $20,000 and $5,000 in stock issuance costs. The two companies had the following balance sheets on July 1, 20X6:
|
Assets |
Rose |
Daisy |
|
Other current assets |
$50,000 |
$70,000 |
|
Inventory |
120,000 |
60,000 |
|
Land |
100,000 |
40,000 |
|
Buildings (net) |
300,000 |
120,000 |
|
Equipment (net) |
430,000 |
110,000 |
|
Total assets |
$1,000,000 |
$400,000 |
|
Liabilities and Equity |
||
|
Current liabilities |
$180,000 |
$60,000 |
|
Common stock ($10 par) |
400,000 |
200,000 |
|
Retained earnings |
420,000 |
140,000 |
|
Total liabilities and equity |
$1,000,000 |
$400,000 |
The following fair values differ from book values for Daisy’s assets:
|
Inventory |
$65,000 |
|
Land |
100,000 |
|
Building |
150,000 |
|
Equipment |
75,000 |
Required
1. Record the investment in Daisy Company and any other entry necessitated by the purchase.
2. Prepare a zone analysis and a determination and distribution of excess schedule.
3. Prepare a consolidated balance sheet for July 1, 20X6, immediately subsequent to the purchase.