I-09.

05

Princeton Corporation purchased all of the stock of Stanford Corporation on July 1.

Princeton paid $3,000,000 for this investment. Stanford's buildings had a fair value of
$1,550,000. All other assets and liabilities of Stanford had fair values that were equivalent
to their recorded amounts. Any excess purchase differential is attributable to goodwill. The
separate balance sheets of Princeton and Stanford follow. Prepare the consolidated
balance sheet that would be reported to Princeton's shareholders.

PRINCETON CORPORATION
Balance Sheet
July 1, 20X5
Assets
Current assets
Cash $565,000
Accounts receivable 233,789
Inventories 255,909 $1,054,698
Long-term Investments
Investment in Stanford 3,000,000
Property, plant & equipment
Land $378,790
Building (net of accumulated depreciation) 861,919
Equipment (net of accumulated depreciation) 476,136 1,716,845
Intangible assets
Patent 540,000
Total assets $6,311,543

Liabilities
Current liabilities
Accounts payable $237,775
Salaries payable 125,400 $363,175
Long-term liabilities
Loan payable 2,500,000
Total liabilities $2,863,175
Stockholders' equity
Capital stock $2,300,000
Retained earnings 1,148,368
Total stockholders' equity 3,448,368
 I-09.05

Total Liabilities and equity $6,311,543

STANFORD CORPORATION
Balance Sheet
July 1, 20X5
Assets
Current assets
Cash $34,545
Accounts receivable 180,800
Inventories 343,687 $559,032
Property, plant & equipment
Land $137,776
Building (net of accumulated depreciation) 688,099
Equipment (net of accumulated depreciation) 657,887 1,483,762
Total assets $2,042,794

Liabilities
Current liabilities
Accounts payable $118,998
Salaries payable 23,441 $142,439
Long-term liabilities
Loan payable 632,179
Total liabilities $774,618
Stockholders' equity
Capital stock $800,000
Retained earnings 468,176
Total stockholders' equity 1,268,176
Total Liabilities and equity $2,042,794
I-09.05
I-09.05
Name:
I-09.05
Date: Section:

PRINCETON CORPORATION AND CONSOLIDATED SUBSIDIARY PRINCETON

Balance Sheet Balan
July 1, 20X5 July
Assets
Current assets
Cash $599,545
Accounts receivable 414,589
Inventories 599,596 $1,613,730
Property, plant & equipment
Land $516,566
Building (net of accumulated depreciation)2,411,919
Equipment (net of accumulated depreciation)
1,134,023 4,062,508
Intangible assets
Goodwill $869,923
Patent 540,000 1,409,923
Total assets $7,086,161

Liabilities
Current liabilities
Accounts payable $356,773
Salaries payable 148,841 $505,614
Long-term liabilities
Loan payable 3,132,179
Total liabilities $3,637,793
Stockholders' equity
Capital stock $2,300,000
Retained earnings 1,148,368
Total stockholders' equity 3,448,368
Total Liabilities and equity $7,086,161
Name:
I-09.05
Date: Section:

PRINCETON CORPORATION STANFORD CORPORATION

Balance Sheet Balance Sheet
July 1, 20X5 July 1, 20X5
Assets Assets
Current assets Current assets
Cash $565,000 Cash
Accounts receivable 233,789 Accounts receivable
Inventories 255,909 $1,054,698 Inventories
Long-term Investments Property, plant & equipment
Investment in Stanford 3,000,000 Land
Property, plant & equipment Building (net of accumulated depreciation)
Land $378,790 Equipment (net of accumulated depreciation)
Building (net of accumulated
861,919
depreciation) Total assets
Equipment (net of accumulated
476,136
depreciation)
1,716,845
Intangible assets Liabilities
Patent 540,000 Current liabilities
Total assets $6,311,543 Accounts payable
Salaries payable
Liabilities Long-term liabilities
Current liabilities Loan payable
Accounts payable $237,775 Total liabilities
Salaries payable 125,400 $363,175 Stockholders' equity
Long-term liabilities Capital stock
Loan payable 2,500,000 Retained earnings
Total liabilities $2,863,175 Total stockholders' equity
Stockholders' equity Total Liabilities and equity
Capital stock $2,300,000
Retained earnings 1,148,368
Total stockholders' equity 3,448,368 Building Fair value 1,550,000
Total Liabilities and equity $6,311,543
 Name:
I-09.05
Date: Section:

ANFORD CORPORATION
Balance Sheet
July 1, 20X5

$34,545
180,800
343,687 $559,032
equipment
$137,776
688,099
657,887 1,483,762
$2,042,794

$118,998
23,441 $142,439

632,179
$774,618

$800,000
468,176
1,268,176
es and equity $2,042,794