Constructing the Consolidated Balance Sheet at Acquisition On January 1 of the c

Question

Constructing the Consolidated Balance Sheet at Acquisition
On January 1 of the current year, Healy Company purchased all of the common shares of Miller Company for $500,000 cash. Balance sheets of the two firms immediately after the acquisition follow:

During purchase negotiations, Miller's plant assets were appraised at $425,000 and all of its remaining assets and liabilities were appraised at values approximating their book values. Healy also concluded that an additional $45,000 (for goodwill) demanded by Miller's shareholders was warranted because Miller's earning power was better than the industry average. Prepare the consolidating adjustments and the consolidated balance sheet at acquisition.

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Please answer all parts that say answer

Healy Miller Consolidating adjustments Consolidated Current assets $1,700,000 $120,000 Answer $Answer Investment in Miller 500,000 - Answer Answer Plant assets, net 3,000,000 410,000 Answer Answer Goodwill - - Answer Answer Total assets $5,200,000 $530,000 $Answer Liabilities $ 700,000 $ 90,000 Answer $Answer Contributed capital 3,500,000 400,000 Answer

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Retained earnings 1,000,000 40,000 Answer Answer

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Total liabilities & stockholders' equity $5,200,000 $530,000

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Explanation / Answer

Note:-

1)current assets = 1,700,000 + 120,000=1,820,000

2) Investments= adjustment of common share purchsed by healy company of miller company for $5,00,000

3) plant asset, net= $425000 - 410,000 = $15,000,

3,000,000 + 4,10,000 + 15,000 = $3,425,000

4) Goodwill - Healy concluded additional $45000 (for goodwill) demanded by Miller shareholder

5) Liabilities= $7,00,000 + 90,000 = 790,000

Healy miller consolidating adjustment consolidated Current assets $1,700,000 $120,000 0 $1,820,000 Investment in miller $5,00,000 - ($5,00,000) 0 Plant asset, net $3,000,000 $4,10,000 $15,000 $3,425,000 Goodwill - - $45,000 $45,000 Total assets $5,200,000 $5,30,000 $5,290,000 Liabilities $7,00,000 $90,000 0 $790,000 Contributed capital $3,500,000 $4,00,000 ($4,00,00) $3,500,000 Retained earnings $1,000,000 $40,000 ($40,000) $1,000,000 Total liability and stock holder equity $5,200,000 $5,30,000 5,290,000

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