Constructing the Consolidated Balance Sheet at Acquisition

Constructing the Consolidated Balance Sheet at Acquisition On January 1 of the current year, Healy Company purchased all of the common shares

Constructing the Consolidated Balance Sheet at Acquisition

On January 1 of the current year, Healy Company purchased all of the common shares of Miller Company for $500,000 cash. Balance sheets of the two firms immediately after the acquisition follow:

During purchase negotiations, Miller’s plant assets were appraised at $425,000 and all of its remaining assets and liabilities were appraised at values approximating their book values. Healy also concluded that an additional $75,000 (for goodwill) demanded by Miller’s shareholders was warranted because Miller’s earning power was better than the industry average.

Prepare the consolidating adjustments and the consolidated balance sheet at acquisition.

Use negative signs with consolidating adjustment answers, when appropriate.

  Healy

Company

Miller

Company

Consolidating

Adjustments

Consolidated

Balance Sheet

Current assets $1,800,000 $90,000 Answer 0

 

$Answer 1890000

 

Investment in Miller 500,000 Answer -50000

 

Answer 0

 

Plant assets, net 3,000,000 410,000 Answer 15000

 

Answer 3425000

 

Goodwill Answer 75000

 

Answer 75000

 

Total assets $5,300,000 $500,000   $Answer 5390000

 

         
Liabilities $ 700,000 $ 90,000 Answer 0

 

$Answer 790000

 

Contributed capital 3,600,000 370,000 Answer 370000

 

Answer 3600000

 

Retained earnings 1,000,000 40,000 Answer -40000

 

Answer 1000000

 

Total liabilities & stockholders’ equity $5,300,000 $500,000   $Answer 5390000

 

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