The Following Are Preliminary Financial Statements for Black Co Required:
Assuming That These Two Companies Retained Their Separate Legal

question 18

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. $\begin{array}{lll}&\text { Black Co .}&\text { Blue Co. }\\\text { Sales } & \$ 360,000 & \$ 228,000 \\\text { Expenses } & \underline{(240,000)} & \underline{(132,000)} \\\text { Net income } & \underline{\$ 120,000} & \underline{\$ 96,000}\\\\\text { Retained earning, January 1, 20X1 } & \$ 480,000 & \$ 252,000 \\\text { Net income (from above) } & 120,000 & 96,000 \\\text { Dividends paid } & \underline{(36,000)} & \underline{-0- } \\\text { Retained earnings, December 31, 20X1 } & \underline{\$ 564,000} & \underline{\$ 348,000}\\ \\\text { Current assets } & \$ 360,000 & \$ 120,000 \\\text { Land } & 120,000 & 108,000 \\\text { Building (net) } & \underline{480,000} & \underline{336,000} \\\text { Total assets } & \underline{\$ 960,000} & \$ 564,000\\\\\text { Liabilities } & \$ 108,000 & \$ 132,000 \\\text { Common stock } & 192,000 & 72,000 \\\text { Additional paid-in capital } & 96,000 & 12,000 \\\text { Retained earnings, December } 31,20 \mathrm{X} 1 & \underline{564,000} & \underline{348,000} \\\text { Total liabilities and stockholders' equity } & \underline{\$ 960,000} & \underline{\$ 564,000}\end{array}$
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:

Statistical Testing

A mathematical procedure to determine if there is a significant difference between groups or conditions in a study.

Convergent Validation

A method in research where different approaches are used to collect data on the same subject, enhancing the reliability of the findings.

Lines of Sight

In management or design, the clear visual or conceptual path for workflow, communication, or strategic alignment.

Triangulation

The use of multiple methods or data sources in research to improve the accuracy and validity of results by cross-verifying findings.