On May 1, Burns Corporation acquired 100 percent of the outstanding ownership shares of Quigley Corporation in exchange for $733,000 cash. At the acquisition date, Quigley's book and fair values were as follows: Cash Receivables Inventory Land Building and equipment (net) Patented technology Total assets Accounts payable Long-term liabilities Common stock ($5 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders equity Total assets Book Value Fair Value $ 101,000 $ 101,000 229,000 229,000 254,000 323,000 157,500 118,500 330,000 409,000 0 220,000 Assets $1,071,500 $ 1,400,500 $ 146,000 $ 666,000 210,000 90,000 (40,500) $1,071,500 Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown accounting in order to show recent fair valuations for its assets. Prepare a separate acquisition-date balance sheet for Quigley Corporation using pushdown accountin 146,000 666,000 QUIGLEY CORPORATION Balance Sheet May 1 Liabilities and stockholders' Equity 0 Total liabilities and stockholders' equity 0
On May 1, Burns Corporation acquired 100 percent of the outstanding ownership shares of Quigley Corporation in exchange for $733,000 cash. At the acquisition date, Quigley's book and fair values were as follows: Cash Receivables Inventory Land Building and equipment (net) Patented technology Total assets Accounts payable Long-term liabilities Common stock ($5 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders equity Total assets Book Value Fair Value $ 101,000 $ 101,000 229,000 229,000 254,000 323,000 157,500 118,500 330,000 409,000 0 220,000 Assets $1,071,500 $ 1,400,500 $ 146,000 $ 666,000 210,000 90,000 (40,500) $1,071,500 Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue. Consequently, Quigley will issue a set of financial statements separate from that of its new parent to support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown accounting in order to show recent fair valuations for its assets. Prepare a separate acquisition-date balance sheet for Quigley Corporation using pushdown accountin 146,000 666,000 QUIGLEY CORPORATION Balance Sheet May 1 Liabilities and stockholders' Equity 0 Total liabilities and stockholders' equity 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On May 1, Burns Corporation acquired 100 percent of the outstanding ownership shares of Quigley
Corporation in exchange for $733,000 cash. At the acquisition date, Quigley's book and fair values
were as follows:
Cash
Receivables
Inventory
Land
Building and equipment (net)
Patented technology
Total assets
Accounts payable
Long-term liabilities
Common stock ($5 par value)
Additional paid-in capital
Retained earnings
Total liabilities and stockholders equity
Total assets
Book Value
Fair Value
$ 101,000 $ 101,000
229,000
229,000
254,000
323,000
157,500
118,500
330,000
409,000
0
220,000
Assets
$1,071,500 $ 1,400,500
$ 146,000 $
666,000
210,000
90,000
(40,500)
$1,071,500
Burns directs Quigley to seek additional financing for expansion through a new long-term debt issue.
Consequently, Quigley will issue a set of financial statements separate from that of its new parent to
support its request for debt and accompanying regulatory filings. Quigley elects to apply pushdown
accounting in order to show recent fair valuations for its assets.
Prepare a separate acquisition-date balance sheet for Quigley Corporation using pushdown accountin
146,000
666,000
QUIGLEY CORPORATION
Balance Sheet
May 1
Liabilities and stockholders' Equity
0 Total liabilities and stockholders' equity
0
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