Student Name: Class: Problem 02-19 MARSHALL COMPANY Part a.

Marshall and Tucker Consolidated Balances Marshall's acquisition of Tucker represents a bargain purchase because the fair value of the net assets acquired exceeds the fair value of the consideration transaction as follows: Fair value of consideration transferred Fair value of net assets acquired Gain on bargain purchase 400000 515,000 115,000
Correct!

$ $

Record 3 transactions that occurred to create the business combination: MARSHALL COMPANY General Journal Account Debit Credit

(To record liabilities and stock issued for Tucker acquisition at fair value)

(To record payment of combination fees)

(To record payment of stock issuance costs)

Marshall's trial balance is adjusted for the transactions (as shown in the worksheet that follows). Consideration transferred at fair value Book value (assets minus liabilities or stockholders' equity) Book value in excess of consideration Allocation to specific accounts based on fair value: Inventory Land Buildings Bargain purchase (fair market value in excess of purchase price)

Student Name: Class: Problem 02-19 Account Name Cash Balance Explanation

Receivables

Inventory

Land

Buildings

Equipment

Total Assets

Accounts Payable

Long-term Liabilities

Common Stock

Additional Paid-In Capital

Retained Earnings

Total Liabilities & Equity

Student Name: Class: Problem 02-19 Part b. Marshall and Tucker Consolidated Worksheet MARSHALL COMPANY AND CONSOLIDATED SUBSIDIARY Consolidation Worksheet January 1, 2011 Marshall Company Tucker Company $ 270,000 360,000 200,000 420,000 160,000 20,000 90,000 140,000 180,000 220,000 50,000 Consolidation Entries Debit Credit Consolidated Totals $ 20,000 360,000 500,000 380,000 640,000 210,000
Try again! Correct! Try again! Try again! Try again! Correct!

Accounts Debit Balances Cash Receivables Inventory Land Buildings (net) Equipment (net) Investment in Tucker Total debits Credit Balances Accounts payable Long-term liabilities Common stock Additional paid-In capital Retained earnings, 1/1/11 Total credits

$ 1,410,000

700,000

Correct! $ 2,110,000 Try again!

150,000

505,000 655,000

40,000 200,000 120,000 340,000 700,000

190,000 200,000 120,000 845,000 $ 1,355,000

Correct! Try again! Try again! Try again! Try again! Try again!

Given Data P02-19: MARSHALL COMPANY Tucker Company outstanding common stock acquired by Marshall Company Long-term liabilities issued by Marshall for acquisition Marshall Company's $1 par common stock issued for acquisition - number of shares Fair market value of Marshall stock Fees paid by Marshall for arranging acquisition Stock issuance costs paid by Marshall Tucker Company inventory - undervalued Tucker Company land - undervalued Tucker Company buildings - undervalued Marshall Tucker Company Company Book Book Value Value $ 60,000 $ 20,000 270,000 90,000 360,000 140,000 200,000 180,000 420,000 220,000 160,000 50,000 (150,000) (40,000) (430,000) (200,000) (110,000) (120,000) (360,000) (420,000) (340,000) 100% $ $ $ $ $ $ $ $ 200,000 20,000 10 30,000 12,000 5,000 20,000 30,000

Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock - $1 par Common stock - $20 par Additional paid-in capital Retained earnings, 1/1/11

Student Name: Morgan Bertone Class: Advanced Accounting Problem 02-20

- Purchase price and account allocation Consideration transferred at fair value Book value Excess fair over book value Allocation of excess fair value to specific assets and liabilities -to Computer software -to Equipment -to Client contracts -to IPR&D -to Notes payable Goodwill $ 495,000 265,000 230,000 Correct!

50,000 (10,000) 100,000 40,000 (5,000) $

175,000 55,000 Correct!

PRATT COMPANY AND SPIDER, INC. Consolidation Worksheet December 31, 2011

Accounts Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts R&D asset Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities $

Pratt 36,000 116,000 140,000 495,000 210,000 595,000 308,000 1,900,000 (88,000) (510,000) (380,000) (170,000) (752,000) (1,900,000)

Spicer $ 18,000 52,000 90,000 20,000 130,000 40,000 350,000 (25,000) (60,000) (100,000) (25,000) (140,000) (350,000) [A] [A] [A] [A] [A]

Consolidation Entries Debit Credit

[S] [A] 50,000

265,000 230,000

Consolidated Totals $ 54,000 168,000 230,000 280,000 725,000 338,000 100,000 40,000 55,000 $ 1,990,000 (113,000) (575,000) (380,000) (170,000) (752,000) $ (1,990,000)

Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct! Correct!

10,000 100,000 40,000 55,000

[A] [S] [S] [S]

5,000 100,000 25,000 140,000

Student Name: Morgan Bertone Class: Advanced Accounting Problem 02-20 PRATT COMPANY AND SUBSIDIARY Consolidated Balance Sheet December 31, 2011 Cash Receivables Inventory Computer software Buildings (net) Equipment (net) Client contracts R&D asset Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities $ 54,000 168,000 230,000 280,000 725,000 338,000 100,000 40,000 55,000 $ 1,990,000 Correct! $ (113,000) (575,000) (380,000) (170,000) (752,000) $ (1,990,000) Correct!

Given Data P02-20: PRATT COMPANY Spider, Inc. outstanding stock acquired by Pratt Company Cash paid by Pratt for acquisition Assessment of Spider's fair and book value differences: 100% $ 495,000

Computer software Equipment Client contracts In-process research and development Notes payable

Book Fair Values Values $ 20,000 $ 70,000 40,000 30,000 100,000 40,000 (60,000) (65,000)

December 31, 2011 Financial Information Pratt 36,000 116,000 140,000 495,000 210,000 595,000 308,000 $ 1,900,000 $ $ Spider 18,000 52,000 90,000 20,000 130,000 40,000 $ 350,000 $ (25,000) (60,000) (100,000) (25,000) (140,000) (350,000)

Cash Receivables Inventory Investment in Spider Computer software Buildings (net) Equipment (net) Client contracts Goodwill Total assets Accounts payable Notes payable Common stock Additional paid-in capital Retained earnings Total liabilities and equities

(88,000) $ (510,000) (380,000) (170,000) (752,000) $ (1,900,000) $

Student Name: Class: Problem 02-30 Part a. Merrill, Inc. and Harriss Co. Statutory Merger - Purchase price and account allocation Cash paid Fair value of shares issued Direct acquisition costs Cost of acquisition Cost of acquisition Fair value of net assets acquired: Cash Receivables Inventory Land Buildings Equipment Patent Accounts payable Long-term liabilities Goodwill MERRILL, INC. General Journal

(To record merger with Harriss at cost)

(Stock issue costs incurred)

Student Name: Class: Problem 02-30 Part b. MERRILL, INC. General Journal Account Debit Credit

(To record purchase of Harriss' shares)

(Direct combination costs incurred)

(Stock issuance costs incurred)

MERRILL, INC., AND HARRISS CO. Consolidation Worksheet January 1, 2008 Merrill, Inc. $ 160,000 220,000 Harriss Co. 40,000 90,000 130,000 60,000 110,000 50,000 Consolidation Entries Debit Credit Consolidated Totals

Accounts Debits Cash Receivables Inventory Investment in Harriss Land Buildings Equipment Patent Goodwill Totals Credits Accounts payable Long-term liabilities Common stock Additional paid-in capital Retained earnings Totals

100,000 400,000 120,000 -

160,000 380,000

360,000

30,000 170,000 40,000 240,000

Given Data P02-30: Harriss Company outstanding voting shares acquired by Merrill Inc. Cash paid by Merrill to acquire shares Merrill Company's $10 par common stock issued for acquisition - number of shares Fair market value of Merrill stock at acquisition date Fees paid by Merrill for arranging acquisition Stock issuance costs paid by Merrill Harriss Company fully amortized patent - value 100% $ $ $ $ $ $ 200,000 10,000 18 10,000 6,000 30,000

Cash Receivables Inventory Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock Retained earnings

Merrill, Inc. Book Value $ 300,000 $ 160,000 220,000 100,000 400,000 120,000 (160,000) (380,000) (400,000) (360,000)

Harriss Company Book Fair Value Value 40,000 $ 40,000 90,000 80,000 130,000 130,000 60,000 60,000 110,000 140,000 50,000 50,000 (30,000) (30,000) (170,000) (150,000) (40,000) (240,000)