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    Consolidated Financial Statement Excercise 3-4

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    Winnie Tan
    The document summarizes a business acquisition transaction between Peach Company and Swartz Company. Peach Company issued 1,500 shares of its common stock valued at $60 per share to acquire all 2,000 outstanding shares of Swartz Company. Registration costs of $1,700 were paid in cash. Prior to the acquisition, Peach Company had total assets of $347,000 and Swartz Company had total assets of $122,000. The difference between the book value and value implied by the purchase price relates to goodwill.

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    Consolidated Financial Statement Excercise 3-4

    Uploaded by

    Winnie Tan
    211 views2 pages
    The document summarizes a business acquisition transaction between Peach Company and Swartz Company. Peach Company issued 1,500 shares of its common stock valued at $60 per share to acquire all 2,000 outstanding shares of Swartz Company. Registration costs of $1,700 were paid in cash. Prior to the acquisition, Peach Company had total assets of $347,000 and Swartz Company had total assets of $122,000. The difference between the book value and value implied by the purchase price relates to goodwill.

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    The document summarizes a business acquisition transaction between Peach Company and Swartz Company. Peach Company issued 1,500 shares of its common stock valued at $60 per share to acquire all 2,000 outstanding shares of Swartz Company. Registration costs of $1,700 were paid in cash. Prior to the acquisition, Peach Company had total assets of $347,000 and Swartz Company had total assets of $122,000. The difference between the book value and value implied by the purchase price relates to goodwill.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    211 views2 pages

    Consolidated Financial Statement Excercise 3-4

    Uploaded by

    Winnie Tan
    The document summarizes a business acquisition transaction between Peach Company and Swartz Company. Peach Company issued 1,500 shares of its common stock valued at $60 per share to acquire all 2,000 outstanding shares of Swartz Company. Registration costs of $1,700 were paid in cash. Prior to the acquisition, Peach Company had total assets of $347,000 and Swartz Company had total assets of $122,000. The difference between the book value and value implied by the purchase price relates to goodwill.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 2

    On January 1, 2018, Peach Company issued 1,500 of its $20 par value common shares with a fair value of

    $60 per share in exchange for the 2,000 outstanding common shares of Swartz Company in a purchase
    transaction. Registration costs amounted to $1,700, paid in cash. Just prior to the acquisition, the
    balance sheets of the two companies were as follows:
    Peach Company Swartz Company
    Cash $ 73,000 $ 13,000
    Account receivable (net) 95,000 19,000
    Inventory 58,000 25,000
    Plant and equipment (net) 95,000 43,000
    Land 26,000 22,000
    Total assets $ 347,000 $ 122,000

    Account payable $ 66,000 $ 18,000


    Notes payable 82,000 21,000
    Common stock, $20 par value 100,000 40,000
    Other contributed capital 60,000 24,000
    Retained earnings 39,000 19,000
    Total equities $ 347,000 $ 122,000

    Any difference between the book value of equity and the value implied by the purchase price relates to
    goodwill.

    A. Prepare the journal entry on Peach Company's books to record the exchange of stock.
    Investment in S Company 90,000 1,500 x 60
    Common Stock 30,000 1,500 x 20
    Other Contributed Capital 60,000 1,500 x 40

    Other Contributed Capital 1,700


    Cash 1,700

    B. Prepare a Computation and Allocation Schedule for the difference between book value and value
    implied by the purchase price.
    P Share Non Controlling Total Value
    Purchase price & implied value 90,000 0 90,000
    Less: BV of subsidiary equity
    Common Stock 40,000 0 40,000
    Other Contributed Capital 24,000 0 24,000
    Retained Earning 19,000 0 19,000
    Difference between IV&BV 7,000 0 7,000

    Journal:
    Common Stock 40,000
    Other Contributed Capital 24,000
    Retained Earnings 19,000
    Difference between IV & BV 7,000
    Investment in S 90,000

    Goodwill 7,000
    Dfference between IV & BV 7,000

    C. Prepare a consolidated balance sheet at the date of acquisition.


    Consolidated Balance Sheet Workpaper
    Peach Company & Subsidiary
    January 1 2018
    Asset: P Comp S Comp Debit Credit NCI Consolidated
    Cash 71,300 13,000 84,300
    A/R 95,000 19,000 114,000
    Inventory 58,000 25,000 83,000
    PPE 95,000 43,000 138,000
    Land 26,000 22,000 48,000
    Goodwill 7,000 7,000
    Difference 7,000 7,000 0
    Investment 90,000 90,000 0
    Total Asset 435,300 122,000 14,000 97,000 474,300
    Liabilities:
    A/P 66,000 18,000 84,000
    Notes Payable 82,000 21,000 103,000
    Common Stock
    P Comp 130,000 130,000
    S Comp 40,000 40,000 0
    OCC
    P Comp 118,300 118,300
    S Comp 24,000 24,000 0
    R/E
    P Comp 39,000 39,000
    S Comp 19,000 19,000 0
    Total Liab & Equity 435,300 122,000 83,000 474,300

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