The Following Are Preliminary Financial Statements for Black Co

question 106

Essay

The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December 31, 20X1.

On December 31, 20X1 (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 several 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, 20X1 assuming the transaction is treated as a purchase combination.

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Definitions:

Transitional Change

A period or process of moving from one state, stage, or condition to another, often involving significant shifts in operations or strategy.

Implementing

The process of putting a decision or plan into effect; execution.

Basic Problem Solving

The process of identifying a problem, determining the cause, and finding an effective solution through a series of steps.

Transformational Change

A profound, radical shift that fundamentally alters the culture, operations, and direction of an organization, often in response to significant external pressures.