80.2K

Verified Solution

Link Copied!

Problem $2-29($Algo$)($LO $2-4,2-5,2-6$b$,2-6$c$,2-7)$

$5\mathrm{.}5$

points

On January $1,2024,$ Presidio Company acqulred $100$ percent of the outstanding common stock of Mason Company. To

acquire these shares, Presidio Issued to the owners of Mason $$329,000$ in long$-$term liabilities and $20,000$ shares of

common stock having a par value of $$1$ per share but a falr value of $$10$ per share. Presidlo pald $$32,500$ to

accountants, lawyers, and brokers for assistance in the acquisition and another $$17,000$ in connection with stock

Issuance costs.

Prior to these transactions, the balance sheets for the two companies were as follows:

Note: Parentheses indicate a credit balance.

Presidlo's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $$5,300,$ Land by

$$33,400,$ and Bulidings by $$34,000.$ Presidlo plans to maintain Mason's separate legal identity and to operate Mason as

a wholly owned subsidlary.

Required:

a$.$ Prepare Presidio's journal entrles to record its acquisition of Mason, related professional fees paid, and stock

acquisition costs.

b$.$ Separately determine each Individual amount that Presidio Company would report in Its consolidated balance sheet

following the acquisition of Mason. Include in Presidio's retained earnings any adjustments to income accounts from

part $($a$).$

c$.$ To verify the answers found in part $($b$),$ adjust Presidlo's column of accounts for the journal entries in part $($a$)$ and then

prepare a worksheet to consolldate the balance sheets of these two companies at the acquisition date.

Complete this question by entering your answers in the tabs below.

$ABC$

Separately determine each individual amount that Presidio Company would report in its

consolidated balance sheet following the acquisition of Mason. Include in Presidio's retained

earnings any adjustments to income accounts from part $($a$).$

Note: Input all amounts as positive values.

Show less $$

Answer & Explanation Solved by verified expert

See Answer