Posted: February 5th, 2019
The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December 31,
The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December 31, 20X1 prior to Black’s acquisition of Blue.Black co Blue CoSales 360,000 228,000Expenses (240,000) (132,000)Net income 120,000 96,000Retained earnings 1/1/11 480,000 252,000Net income (from above) 120,000 96,000Dividends paid (36,000) 0Retained earnings 12/31/11 564,000 348,000Current assets 360,000 120,000Land 120,000 108,000Building (net) 480,000 336,000Total assets 960,000 564,000Liabilities 108,000 132,000Common Stock 192,000 72,000Add’l paid-in capital 96,000 12,000Retained earnings 12/31/11 564,000 348,000Total Liab & Stock. Equity 960,000 564,000On December 31, 20X1 (subsequent to the preceding statements), Black exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of Blue. Black’s stock on that date has a fair value of $60 per share. Black was willing to issue 10,000 shares of stock because Blue’s land was appraised at $204,000. Black also paid $14,000 to several attorneys and accountants who assisted in creating this combination.Required:Assuming that these two companies retained their separate legal identities, prepare a consolidation worksheet as of December 31, 20X1 after the acquisition transaction is completed.
