ACCT 4455 Assignment 1 (40 marks)
Notes
Good format so include proper title with proper dates (3 lines with dates written fully out)
All calculations must be shown for full marks
All #s must be given in brackets on Consolidated F/Statements along with totals
Question 1 (15 marks)
Peter Enterprises Inc. has decided to purchase 100% of the voting shares of Jack Inc.
for $310,000 in Cash on May 1, Year 4. On the date, the balance sheets of each of
these companies were as follows:
Peter Inc.
Jack Inc.
Cash and Short-Term Securities $720,000
Inventory
$110,000
Plant and Equipment (net)
$280,000
$30,000
$30,000
$125,000
Total Assets
$1,110,000
$185,000
$100,000
$120,000
$200,000
$690,000
$25,000
$40,000
$70,000
$50,000
$1,110,000
$185,000
Current Liabilities
Bonds Payable
Common Shares
Retained Earnings
Total Liabilities and Equity
On that date, the fair values of Jack’s assets and liabilities were as follows:
Cash and Short-Term Securities
Inventory
Plant and Equipment (net)
Current Liabilities
Bonds Payable
$40,000
$25,000
$200,000
$25,000
$30,000
Required (show all work)
a) Prepare the Calculate and Allocation of Acquisition Differential schedule.
b) Prepare the journal entry to record Peter’s acquisition of Jack’s shares.
c) Prepare Peter’s Consolidated Balance Sheet immediately following its acquisition of
Jack’s shares (in good format and write out all words completely, including
account names).
Hints: Goodwill = $100,000; Consolidated Total Assets = $1,165,000
ACCT 4455
Fall 2016
Page 1 of 2
Question 2 (25 marks)
Pots purchased 80% of Spoon’s common shares for $212,000 on November 30, Year 5.
Pots and Spoon Inc. had the following balance sheets on November 30, Year 5 prior to
the purchase:
Pots
Spoon
Fair Value
Cash
Accounts Receivable
Inventory
Plant and Equipment (net)
Trademark
$300,000
$60,000
$40,000
$300,000
–
$70,000
$54,000
$60,000
$260,000
$23,000
$70,000
$54,000
$40,000
$310,000
$18,000
Total Assets
$700,000
$467,000
Accounts Payable
Bonds Payable
Common Shares
Retained Earnings
$160,000
$390,000
$110,000
$40,000
$120,000
$202,000
$85,000
$60,000
Total Liabilities and Equity
$700,000
$467,000
$120,000
$207,000
Required (show all work)
a) Prepare the journal entry to record the purchase of Spoon’s common shares on
November 30, Year 5.
b) Prepare the Consolidated Balance Sheet at November 30, Year 5
c) Calculate goodwill and non-controlling interest on the consolidated balance sheet on
November 30, Year 5 under the parent company extension theory.
Hints: Goodwill = $100,000; Consolidated BS total assets = $1,080,000
ACCT 4455
Fall 2016
Page 2 of 2
