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.

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Definitions:

Separating Equilibrium

A concept in game theory where different types of players choose distinct strategies, allowing them to be distinguished by others.

Separating Equilibrium

A situation in a game or market where different types of participants (e.g., buyers and sellers) are sorted into different outcomes based on their types or actions.

Agents

Entities or individuals that act on behalf of others in economic models, making decisions and taking actions to achieve desired outcomes.

Marginal Products

The additional output that results from the use of an additional unit of a productive input, holding other inputs constant.