The Following Are Preliminary Financial Statements for Black Co

question 104

Essay

The following are preliminary financial statements for Black Co.and Blue Co.for the year ending December 31,2018,prior to Black's acquisition of Blue Co.

On December 31,2018 (subsequent to the preceding statements),Black exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of Blue.Black's stock on that date has a fair value of $50 per share.Black was willing to issue 10,000 shares of stock because Blue's land was appraised at $204,000.Black also paid $14,000 to attorneys and accountants who assisted in creating this combination.
Required:
Assuming that these two companies retained their separate legal identities,prepare a consolidation worksheet as of December 31,2018.

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Definitions:

Adjusting Entry

At the end of an accounting timeframe, records are made to attribute income and spending to the specific period in which they were incurred.

Accumulated Depreciation

The total sum of depreciation for a fixed asset that has been charged to expense since the asset was acquired and placed into service.

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of the asset minus any accumulated depreciation.

Equipment Cost

The total amount spent on purchasing equipment, including the purchase price, taxes, shipping, and installation fees.