The Following Are Preliminary Financial Statements for Black Co

question 14

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.

Recognize the role of economies of scale and natural monopolies in the industry.

Distinguish between short-run and long-run profit maximization strategies for monopolists.

Identify factors leading to the existence of monopolies, including legal barriers and control of resources.

Analyze the impact of corporate hierarchy on management complexity in various countries.

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Definitions:

Cognitive Dissonance

A psychological phenomenon that occurs when an individual experiences mental discomfort due to holding contradictory beliefs, ideas, or values at the same time.

Social Loafing

A phenomenon where individuals exert less effort to achieve a goal when they work in a group compared to when they work alone.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.

Discrimination

Unequal and unfavorable treatment of people belonging to distinct groups, usually on the grounds of their race, age, sex, or disabilities.