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ACT 470 Colorado State University MOD2 End of The First Year Subsequent to Date of Acquisition Worksheet
Option #2: Consolidation at the end of the first year subsequent to date of acquisition (purchase price greater than book value)
Assume that a parent company acquires its subsidiary on 1/1/xx, by exchanging 41,500 shares of its $1 par value common stock, with a market value on acquisition date of $36 per share, for all of the outstanding voting shares of the subsidiary. You have been charged with preparing the consolidation of these two entities at 12/31/xx.
On acquisition date (1/1/xx), all of the subsidiary’s assets and liabilities had fair values equaling their book values except PPE assets are undervalued by $81,000 (depreciation =$5,400 per year), the subsidiary has an unrecorded patent with a fair value of $261,000 (amortization = $32,625 per year) and the parent records $162,000 of goodwill in the transaction.
Submission Requirements:
Using the ACT470_Mod02-Option02.xlsx Excel spreadsheet in the Module 2 folder:
- Prepare the consolidated balance sheet at 12/31/xx by placing the appropriate entries in their respective debit/credit column cells.
- Indicate, in the blank column cell to the left of the debit and credit column cells if the entry is a [C], [E] or [A] or [D] entry.
- Use Excel formulas to derive the Consolidated column amounts and totals.
- Using the “Home” key in Excel, go to the “Styles” area and highlight the [C], [E], [A] and [D]cell entries in different shades.
- Review the grading rubric following this assignment, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.
