Solution-Schedule for the investment in shield company

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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Schedule for the investment in shield company

Reference no: EM131298503

Reference no: EM131298503

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