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:

Vouchers

Documents serving as evidence for transactions, such as payments or receipts, and authorize the related accounting entries.

Currency

Currency is a system of money in general use in a particular country, facilitating the buying and selling of goods and services.

Cash Shortage

A Cash Shortage occurs when the actual cash on hand is less than the expected amount, often due to errors or theft.

Petty Cash Account

A small amount of cash kept on hand for making minor business expenses, managed through a system of vouchers for tracking.