Prepare a consolidation worksheet – HR Management
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 Co
Sales 360,000 228,000
Expenses (240,000) (132,000)
Net income 120,000 96,000
Retained earnings 1/1/11 480,000 252,000
Net income (from above) 120,000 96,000
Dividends paid (36,000) 0
Retained earnings 12/31/11 564,000 348,000
Current assets 360,000 120,000
Land 120,000 108,000
Building (net) 480,000 336,000
Total assets 960,000 564,000
Liabilities 108,000 132,000
Common Stock 192,000 72,000
Add’l paid-in capital 96,000 12,000
Retained earnings 12/31/11 564,000 348,000
Total Liab & Stock. Equity 960,000 564,000
On 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.
