The Following Are Preliminary Financial Statements for Black Co

question 26

Essay

The following are preliminary financial statements for Black Co. and Blue Co. for the year ending December 31, 20X1 prior to Black's acquisition of Blue.


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 $60 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 after the acquisition transaction is completed.

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Definitions:

Coping Mechanisms

Psychological strategies that individuals use to manage stress, difficult emotions, or challenging situations.

Anxiety

An emotion of anxiety, apprehension, or discomfort regarding an event with an unpredictable result.

M'Naghten Rule

A legal standard used to evaluate the criminal responsibility of a defendant to determine if they understood the nature of the crime due to a mental disorder.

Mental Disorder

A health condition characterized by significant dysfunction in an individual's cognition, emotional regulation, or behavior, usually associated with distress or impaired functioning.