Kaplan ac 450 unit 2 problem 2-23 and 2- 24 (advanced accounting)

Problem 2-23 [LO4, LO5, LO7]On January 1, 2013, Marshall Company acquired 100 percent of the outstanding common stock of Tucker Company. To acquire these shares, Marshall issued $190,950 in long-term liabilities and 21,600 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Marshall paid $31,200 to accountants, lawyers, and brokers for assistance in the acquisition and another $23,100 in connection with stock issuance costs.    Prior to these transactions, the balance sheets for the two companies were as follows:    Marshall CompanyBook ValueTucker CompanyBook Value  Cash$88,000     $14,400       Receivables300,000     93,600       Inventory327,000     111,000       Land208,000     251,000       Buildings (net)430,000     297,000       Equipment (net)237,000     58,750       Accounts payable(186,000)    (58,750)      Long-term liabilities(510,000)    (281,000)      Common stock—$1 par value(110,000)       Common stock—$20 par value(120,000)      Additional paid-in capital(360,000)    0       Retained earnings, 1/1/13(424,000)    (366,000)    ________________________________________   Note: Parentheses indicate a credit balance.     In Marshall’s appraisal of Tucker, it deemed three accounts to be undervalued on the subsidiary’s books: Inventory by $5,800, Land by $25,050, and Buildings by $39,600. Marshall plans to maintain Tucker’s separate legal identity and to operate Tucker as a wholly owned subsidiary.    a.Determine the amounts that Marshall Company would report in its postacquisition balance sheet. In preparing the postacquisition balance sheet, any required adjustments to income accounts from the acquisition should be closed to Marshall’s retained earnings. (Input all amounts as positive values.)b.Prepare a worksheet to consolidate the balance sheets of these two companies as of January 1, 2013. (Leave no cells blank – be certain to enter “0” wherever required. Enter the consolidation entries of ‘Investment in Tucker Company’ in order of (S) Elimination of subsidiary’s stockholders’ equity and (A) Allocation of Tucker’s consideration fair value in excess of book value. Input all amounts as positive values except for the credit balances which should be entered with the minus sign.) Problem 2-24 [LO4, LO5, LO7, LO8]Pratt Company acquired all of Spider, Inc.’s outstanding shares on December 31, 2013, for $478,050 cash. Pratt will operate Spider as a wholly owned subsidiary with a separate legal and accounting identity. Although many of Spider’s book values approximate fair values, several of its accounts have fair values that differ from book values. In addition, Spider has internally developed assets that remain unrecorded on its books. In deriving the acquisition price, Pratt assessed Spider’s fair and book value differences as follows:    BookValuesFairValues  Computer software$49,500    $88,500      Equipment55,500    36,400      Client contracts0    105,000      In-process research and development0    29,750      Notes payable(104,000)   (112,850)   ________________________________________   At December 31, 2013, the following financial information is available for consolidation:    PrattSpider  Cash$15,500  $19,200    Receivables117,000  57,900    Inventory165,000  103,900    Investment in Spider478,050  0    Computer software250,000  49,500    Buildings (net)600,500  172,500    Equipment (net)319,000  55,500    Client contracts0  0    Goodwill0  0   ________________________________________________________________________________________________________________________________________________________________________________________________________     Total assets$1,945,050  $458,500   ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________  Accounts payable$(96,300) $(65,500)   Notes payable(530,750) (104,000)   Common stock(380,000) (100,000)   Additional paid-in capital(170,000) (25,000)   Retained earnings(768,000) (164,000)  ________________________________________________________________________________________________________________________________________________________________________________________________________     Total liabilities and equities$(1,945,050) $(458,500)  ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Note: Parentheses indicate a credit balance.  Prepare a consolidated balance sheet for Pratt and Spider as of December 31, 2013. (Input all amounts as positive values.)

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