lrom Lhe followlng Lable prepare consolldaLed flnanclal sLaLemenLs of company A under poollng meLhod and purchase meLhod

Company A acqulred company 8 by lssulng equlLy shares worLh of $6000

AsseLs A 8 oollng MeLhod urchase MeLhod
Coodwlll 1300 Coodwlll CalculaLlons under u
Cash cash equlvalenLs 6000 1000 7000 7000 lv of AsseLs 8100
A/8 3000 1400 6400 6400 lv of LlablllLles 3600
lnvenLorles 6400 1800 8200 8200 neL WorLh 4300
1ota| CA 17400 4200 21600 21600 urchase rlce 6000
L 10600 2800 13400 14300 Coodwlll 1300
1ota| Assets 28000 7000 33000 37600
A/ 6000 1700 7700 7700
CLher CL 1300 300 1800 1800
1ota| CL 7S00 2000 9300 9300
L1 debL 8200 1600 9800 9800
1ota| L|ab|||t|es 1S700 3600 19300 19300
Common SLock 2300 700 3200 8300
8L 9800 2700 12300 9800
1oLal shareholders equlLy 12300 3400 13700 18300
1oLal llablllLles shareholders equlLy 28000 7000 33000 37600
no of shares
*1he falr value of L ls 3900
Llder co acqulred for cash all of Lhe ouLsLandlng sLock of 8abe co on dec 31 for $870000
1he balance sheeLs of Lhe Lwo companles [usL prlor Lo Lhe acqulslLlons were as follows
Llder 8abe urchase MeLhod
Coodwlll 222000 Coodwlll CalculaLlons under urchase MeLhod
CA 1974000 138000 1234000 lv of AsseLs 840000
neL lA 32814000 337600 33369600 lv of LlablllLles 192000
CLher AsseLs 14412000 134400 14346400 neL WorLh 648000
1oLal AsseLs 49200000 810000 49392000 urchase rlce 870000
Coodwlll 222000
CL 3600000 42000 3642000
L1 debL 13382000 130000 13732000
Common sLock 29418000 382000 29418000
8L 600000 36000 600000
1oLal llablllLles and equlLy 49200000 810000 49392000
An lndependenL appralser valued Lhe asseLs of 8abe co as follows
CA 130000
neL lA 333600
CLher AsseLs 134400
repare a consolldaLed balance sheeL as of Lhe acqulslLlon daLe
Assume LhaL no lnLer company LransacLlons have occurred ln Lhe pasL and LhaL Llder wlll assume 8abes llablllLles
oo||ng Method urchase Method
8v Mv 8v Mv Coodwlll CalculaLlons under urcha
CA 300000 633000 130000 173000 630000 373000 lv/Mv of AsseLs 1473000
lA 700000 840000 230000 323000 930000 1023000 lv/Mv of LlablllLles 1100000
Coodwlll 273000 neL WorLh 373000
1ota|s 1200000 147S000 400000 S00000 1600000 187S000 urchase rlce 630000
Coodwlll 273000
CL 230000 73000 323000 323000
L1L 173000 30000 223000 773000
CaplLal 373000 230000 803000 373000
8L 200000 43000 243000 200000
1ota|s 1200000 400000 1600000 187S000
Company A Company 8
AfLer analysls company A a non uS company ls conslderlng acqulslLlon of company 8 under As local CAA Lwo alLernaLlves meLhods of acqulslLlon accou
Lhe company lL can elLher buy all of company 8s sLock on Lhe markeL for a cash ouLlay of $630000 or company A can exchange auLhorlsed buL unlssued co
a value of $630000 (currenLly selllng for $30 per share) for all of Lhe ouLsLandlng shares of company 8 ln elLher case company A wlll assume company 8s lla
company 8 wlll be preserved as a wholly owned subsldlary 1he followlng are daLa before Lhe acqulslLlon
A roduce Lhe balance sheeL LhaL would resulL lmmedlaLely afLer LhaL acqulslLlon assumlng a sLock exchange ls comsummaLed and poollng accounLlng ls Lo
only Lhe facLs glven and assume no oLhers
8 resenL Lhe balance sheeL LhaL wouls resulL lmmedlaLely afLer Lhe acqulslLlon ls cosummaLed assumlng LhaL Lhe company 8 sLock ls purchased for cash ra
exchanged Assume LhaL of Lhe $630000 purchase prlce company A Look ouL a Lerm loan for $330000 of Lhe LoLal and used $100000 cash on hand for Lhe r
1he followlng addlLlonl lnformaLlon has been provlded
ConsLrucL Lhe consolldaLed flnanclal sLaLemenLs
Income Statement Data 2001
CarLer ulroff ConsolldaLed
Sales 1040400 408000 1414400
CosL of Sales 816000 299200 1081200
Cross margln 224400 108800 333200
Lxpenses (excludlng lncome Lax) 234600 61200 293800
CperaLlng lncome (loss) 10200 47600 6800
CLher lncome 37400 0 37400
neL lncome 27200 47600 74800
ulvldends 0 30600 0
Added Lo 8L 27200 17000 44200
8a|ance Sheet Data as on December 31 2001
CarLer ulroff ConsolldaLed
AsseLs
Cash 37800 20400 78200
A/8 110300 33700 141100
lnvenLory 120700 34400 173100
lnvesLmenL ln subsldlary 142800 0 0
lanL (neL) 477700 134300 612000
Loan recelvables 0 32300 0
1ota| Assets 909S00 277100 1186600
LlablllLles and equlLy
CL 88400 62900 146200
non currenL LlablllLles 170000 34400 192100
CaplLal sLock 233000 102000 214200
8L 396100 37800 433900
1ota| ||ab|||t|es and equ|ty 909S00 277100 1186600
Larly ln 2001 CarLer corp acqulred ulroff corp ulroff conLlnued Lo operaLe as carLers subsldlary AL Lhe end of 2001 Lhe presldenL of carLer asked Lhe compan
flrm Lo prepare consolldaLed flnanclal sLaLemenLs 1he separaLe flnanclal sLaLemenLs of Lhe Lwo corps are glven ln Lhe followlng Lable
1 uurlng 2001 ulroff dellvered and bllled Lo CarLer good amounLlng Lo $34000 ulroffs cosL for Lhese goods was $23300 CarLer had pald ulroff lnvolces bllled
LoLalled $28900 All of Lhe ulroff goods were sold Lo ouLslde cusLomers ln 2001
2 LaLe ln uec 2001 CarLer Look a loan from ulroff for $32300 cash 1he loan was evldenLly a flve year noLe (no lnLeresL on Lhls loan was recorded ln Lhe accou
company because Lhe LransacLlon occurred so near Lhe end of Lhe year)