Pull Incorporated and Shove Company reported summarized balance sheets as shown below, on December 31, 2011.
On January 1, 2012, Pull purchased 70% of the outstanding capital stock of Shove for $392,000, of which $92,000 was paid in cash, and $300,000 was borrowed from their bank.The debt is to be repaid in 10 annual installments beginning on December 31, 2012, with each payment consisting of $30,000 principal, plus accrued interest.
The excess fair value of Shove Company over the underlying book value is allocated to inventory (60 percent)and to goodwill (40 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition.
a.Current assets
b.Noncurrent assets
c.Current liabilities
d.Long-term debt
e.Stockholders' equity

Question

Pull Incorporated and Shove Company reported summarized balance sheets as shown below, on December 31, 2011.
  On January 1, 2012, Pull purchased 70% of the outstanding capital stock of Shove for $392,000, of which $92,000 was paid in cash, and $300,000 was borrowed from their bank.The debt is to be repaid in 10 annual installments beginning on December 31, 2012, with each payment consisting of $30,000 principal, plus accrued interest.
The excess fair value of Shove Company over the underlying book value is allocated to inventory (60 percent)and to goodwill (40 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition.
a.Current assets
b.Noncurrent assets
c.Current liabilities
d.Long-term debt
e.Stockholders' equity

Quizplus · Accepted Answer

The Answer of Pull Incorporated and Shove Company reported summarized balance sheets as shown below, on December 31, 2011.
  On January 1, 2012, Pull purchased 70% of the outstanding capital stock of Shove for $392,000, of which $92,000 was paid in cash, and $300,000 was borrowed from their bank.The debt is to be repaid in 10 annual installments beginning on December 31, 2012, with each payment consisting of $30,000 principal, plus accrued interest.
The excess fair value of Shove Company over the underlying book value is allocated to inventory (60 percent)and to goodwill (40 percent).
Required: Calculate the balance in each of the following accounts, on the consolidated balance sheet, immediately following the acquisition.
a.Current assets
b.Noncurrent assets
c.Current liabilities
d.Long-term debt
e.Stockholders' equity

Pull Incorporated and Shove Company Reported Summarized Balance Sheets as Shown