Exam 2: Consolidated Statements: Date of Acquisition

When it purchased Sutton, Inc.on January 1, 2016, Pavin Corporation issued 500,000 shares of its $5 par voting common stock.On that date the fair value of those shares totaled $4,200,000.Related to the acquisition, Pavin had payments to the attorneys and accountants of $200,000, and stock issuance fees of $100,000.Immediately prior to the purchase, the equity sections of the two firms appeared as follows: Sutton Common stock \ 4,000,000 \ 700,000 Paid-in capital in excess of par 7,500,000 900,000 Retained earnings 5,500,000 500,000 Total \ 17,000,000 \ 2,100,000 Immediately after the purchase, the consolidated balance sheet should report retained earnings of:

On January 1, 2016, Parent Company purchased 90% of the common stock of Subsidiary Company for $252,000.On this date, Subsidiary had total owners' equity of $240,000 consisting of $50,000 in common stock, $70,000 additional paid-in capital, and $120,000 in retained earnings. ? On January 1, 2016, the excess of cost over book value is due to a $15,000 undervaluation of inventory, to a $5,000 overvaluation of Bonds Payable, and to an undervaluation of land, building and equipment.The fair value of land is $50,000.The fair value of building and equipment is $200,000.The book value of the land is $30,000.The book value of the building and equipment is $180,000. ? Required: ? a.Complete the valuation analysis schedule for this combination.? ? b.Complete the determination and distribution schedule for this combination.? ? c.Prepare, in general journal form, the elimination entries required to prepare a consolidated balance sheet for Parent and Subsidiary on January 1, 2016.

An investor receives dividends from its investee and records those dividends as dividend income because:

Pinehollow acquired all of the outstanding stock of Stonebriar by issuing 100,000 shares of its $1 par value stock.The shares have a fair value of $15 per share.Pinehollow also paid $25,000 in direct acquisition costs.Prior to the transaction, the companies have the following balance sheets: Assets Pinehollow Stonebriar Cash \ 150,000 \ 50,000 Accounts receivable 500,000 350,000 Inventory 900,000 600,000 Property, plant, and equipment (net) 900,000 Total assets \ 3,400,000 \ 1,900,000 Liabilities and Stockholders' Equity Current liabilities \ 300,000 \ 100,000 Bonds payable 1,000,000 600,000 Common stock ( \ 1 par) 300,000 100,000 Paid-in capital in excess of par 800,000 900,000 Retained earnings Total liabilities and equity \ 3,400,000 \ 1,900,000 The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively.What is the amount of property, plant and equipment that will be included in the consolidated balance sheet immediately after the acquisition?