Consolidated Balance Sheet Working Paper, Identifiable Intangibles Fair value of
ID: 2329966 • Letter: C
Question
Consolidated Balance Sheet Working Paper, Identifiable Intangibles
Fair value of new IA stock issued, 1,000 shares, $2 par
When appropriate, use negative signs with your excess of fair value over book value answers (left column only).
Do not use negative signs with answers in the right column.
Excess of acquisition cost over book value
b. Prepare a working paper to consolidate the balance sheets of IA and GP at the date of acquisition.
Use negative signs with your credit balance answers in the Dr (Cr) columns.
Consolidated Balances
Dr (Cr)
c. Prepare the consolidated balance sheet at the date of acquisition, in good form.
Do not use negative signs with any of your answers below.
Long-term liabilities
Shareholders' Equity
Common stock, par
Additional paid-in capital
Accumulated other comprehensive income
Total shareholders’ equity
Total liabilities and equity
Consolidated Balance Sheet Working Paper, Identifiable Intangibles
International Auto (IA) acquires all of the stock of Genuine Parts (GP) and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments. All amounts are in thousands. Cash paid to GP shareholders $5,000 Cash paid to consultants and lawyers 1,200Fair value of new IA stock issued, 1,000 shares, $2 par
36,000 Stock registration fees, paid in cash 900 Fair value of earnings contingency 250 The earnings contingency, if paid, will occur three years subsequent to the acquisition. The balance sheet accounts of GP and IA, just prior to the acquisition, are as follows: InternationalAuto Genuine Parts (in thousands) Book Value
Dr (Cr) Book Value
Dr (Cr) Fair Value
Dr (Cr) Current assets $30,000 $1,000 $1,200 Fixed assets, net 420,000 27,000 20,000 Trademarks 89,000 3,400 6,000 Current liabilities -25,000 -400 -400 Long-term liabilities -350,000 -26,000 -25,000 Common stock, par value -8,000 -500 Additional paid-in capital -110,000 -8,500 Retained earnings -45,000 2,000 Accumulated other comprehensive income -4,000 1,400 Treasury stock 3,000 600 Total $0 $0 In addition to the assets reported on GP’s balance sheet, the following previously unreported intangible assets are identified. Note: Some of these intangibles may not be separately capitalized per ASC Topic 805. (in thousands) Fair value Licensing agreements $2,400 Skilled workforce 15,000 Order backlogs 5,000 Future synergies between IA and GP supply chains 1,600 a. Prepare a schedule calculating the excess of acquisition cost over GP’s book value, and its allocation to GP’s identifiable net assets and goodwill.
When appropriate, use negative signs with your excess of fair value over book value answers (left column only).
Do not use negative signs with answers in the right column.
Enter answers in thousands. Acquisition cost 0 GP book value 0Excess of acquisition cost over book value
0 Excess of fair value over book value: Current assets 0 Fixed assets, net 0 Trademarks 0 ????? 0 ????? 0 Long-term liabilities 0 0 Goodwill 0b. Prepare a working paper to consolidate the balance sheets of IA and GP at the date of acquisition.
Use negative signs with your credit balance answers in the Dr (Cr) columns.
Enter answers in thousands. Consolidation Working Paper Accounts Taken From Books Eliminations (in thousands) International AutoDr (Cr) Genuine Parts
Dr (Cr) Debit Credit
Consolidated Balances
Dr (Cr)
c. Prepare the consolidated balance sheet at the date of acquisition, in good form.
Do not use negative signs with any of your answers below.
Enter answers in thousands. International Auto and SubsidiaryConsolidated Balance Sheet
Date of Acquisition Assets Liabilities Current assets Current liabilities Fixed assets, net
Long-term liabilities
Trademarks Total liabilities Other identifiable intangible assets GoodwillShareholders' Equity
Common stock, par
Additional paid-in capital
Retained earningsAccumulated other comprehensive income
Treasury stockTotal shareholders’ equity
Total assetsTotal liabilities and equity
Explanation / Answer
Hi,
A)
Acquisition cost 40100 (Cash Paid + Fair Value of new stock net of stock registration fee) Note: Direct and indirect costs are expensed and not included in investment GP book value 5000 Excess of acquisition cost over book value 35100 Excess of fair value over book value: Current assets 200 Fixed assets, net -7000 Trademarks 2600 Identifiable Intangible Assets 24000 Long Term Libilities 1000 Goodwill 14300