On January 1, 2011, Rand Corp

question 62

Essay

On January 1, 2011, Rand Corp. issued shares of its common stock to acquire all of the outstanding common stock of Spaulding Inc. Spaulding's book value was only $140,000 at the time, but Rand issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Rand was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Spaulding's records by $60,000 while equipment (five-year life) was undervalued by $25,000. Any consideration transferred over fair value of identified net assets acquired is assigned to goodwill.
Following are the individual financial records for these two companies for the year ended December 31, 2014.
Required:
Prepare a consolidation worksheet for this business combination.

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Definitions:

Incremental Change

Gradual modifications or improvements made over time to processes, products, or systems.

Wheel of Innovation

A conceptual model outlining the cyclical process of innovation, from idea generation through to implementation and market introduction.

Experimenting

The process of carrying out trials or tests to discover, prove, or evaluate the effectiveness or truth of something.

Feasibility

The measure of how possible or practical the implementation of a project, plan, or process is, usually considering economic, technical, and logistical factors.