Schedule for the investment in shield company

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Reference no: EM131298503

Complete Problem

Using the data given in Problem 2-6, assume that Aron Company purchases 80% of the common stock of Shield Company for $320,000 cash.

The following comparative balance sheets are prepared for the two companies immediately after the purchase:


Aron

Shield

Cash

$ 315,000

$ 40,000

Accounts receivable

70,000

30,000

Inventory

130,000

120,000

Investment in Shield Company

320,000

 

Land

50,000

35,000

Buildings and equipment

350,000

230,000

Accumulated depreciation

(100,000)

(50,000)

Copyrights

40,000

10,000

Total assets

$1,175,000

$415,000

Current liabilities

$ 192,000

$ 65,000

Bonds payable

 

100,000

Common stock ($10 par)-Aron

100,000

 

Common stock ($5 par)-Shield

 

50,000

Paid-in capital in excess of par

250,000

70,000

Retained earnings

633,000

130,000

Total liabilities and equity

$1,175,000

$415,000

Required

1. Prepare the value analysis and the determination and distribution of excess schedule for the investment in Shield Company.

2. Complete a consolidated worksheet for Aron Company and its subsidiary Shield Company as of December 31, 2015.

Information from 2-6

On December 31, 2015, Aron Company purchases 100% of the common stock of Shield Company for $450,000 cash. On this date, any excess of cost over book value is attributed to accounts with fair values that differ from book values. These accounts of Shield Company have the following fair values:

Cash

$ 40,000

Accounts receivable

30,000

Inventory

140,000

Land

45,000

Buildings and equipment

225,000

Copyrights

25,000

Current liabilities

65,000

Bonds payable

105,000

The following comparative balance sheets are prepared for the two companies immediately after the purchase:


Aron

Shield

Cash

$ 185,000

$ 40,000

Accounts receivable

70,000

30,000

Inventory

130,000

120,000

Investment in Shield Company

450,000

 

Land

50,000

35,000

Buildings and equipment

350,000

230,000

Accumulated depreciation

(100,000)

(50,000)

Copyrights

40,000

10,000

Total assets

$1,175,000

$415,000

Current liabilities

$ 192,000

$ 65,000

Bonds payable

 

100,000

Common stock ($10 par)-Aron

100,000

 

Common stock ($5 par)-Shield

 

50,000

Paid-in capital in excess of par

250,000

70,000

Retained earnings

633,000

130,000

Total liabilities and equity

$1,175,000

$415,000

Reference no: EM131298503

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