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

question 15

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. $\begin{array}{lll}&\text { Black Co .}&\text { Blue Co. }\\\text { Sales } & \$ 360,000 & \$ 228,000 \\\text { Expenses } & \underline{(240,000)} & \underline{(132,000)} \\\text { Net income } & \underline{\$ 120,000} & \underline{\$ 96,000}\\\\\text { Retained earning, January 1, 20X1 } & \$ 480,000 & \$ 252,000 \\\text { Net income (from above) } & 120,000 & 96,000 \\\text { Dividends paid } & \underline{(36,000)} & \underline{-0- } \\\text { Retained earnings, December 31, 20X1 } & \underline{\$ 564,000} & \underline{\$ 348,000}\\ \\\text { Current assets } & \$ 360,000 & \$ 120,000 \\\text { Land } & 120,000 & 108,000 \\\text { Building (net) } & \underline{480,000} & \underline{336,000} \\\text { Total assets } & \underline{\$ 960,000} & \$ 564,000\\\\\text { Liabilities } & \$ 108,000 & \$ 132,000 \\\text { Common stock } & 192,000 & 72,000 \\\text { Additional paid-in capital } & 96,000 & 12,000 \\\text { Retained earnings, December } 31,20 \mathrm{X} 1 & \underline{564,000} & \underline{348,000} \\\text { Total liabilities and stockholders' equity } & \underline{\$ 960,000} & \underline{\$ 564,000}\end{array}$
Required:
Assuming that these two companies retained their separate legal identities,prepare a consolidation worksheet as of December 31,20X1 after the acquisition transaction is completed.

---

Definitions:

Component Reliability

The probability that an individual part or component of a system performs its intended function under specified conditions for a designated period of time.

Preventive Maintenance

Regular and systematic inspection, cleaning, and replacement of worn parts, materials, and systems to prevent sudden failure and downtime.

Breakdown Maintenance

Maintenance work performed after a machine or system fails to restore it to operational condition.

MTBF Distribution

Mean Time Between Failures Distribution, a statistical representation of the expected time between failures for a system or component, crucial for reliability analysis.