Problem 02-19 MARSHALL COMPANY Part a. Marshall and Tucker Consolidated Balances

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Description

Student Name:
Class:
Problem 02-19
MARSHALL COMPANY
Part a. Marshall and Tucker Consolidated Balances
Marshall’s acquisition of Tucker represents a bargain purchase
because the fair value of the net assets acquired exceeds the
fair value of the consideration transaction as follows:
Fair value of consideration transferred
Fair value of net assets acquired
Gain on bargain purchase

Record 3 transactions that occurred to create the
business combination:
MARSHALL COMPANY
General Journal
Account

Debit

Credit

(To record liabilities and stock issued for Tucker acquisition at fair value)

(To record payment of combination fees)

(To record payment of stock issuance costs)

Marshall’s trial balance is adjusted for the transactions
(as shown in the worksheet that follows).
Consideration transferred at fair value
Book value (assets minus liabilities
or stockholders’ equity)
Book value in excess of consideration
Allocation to specific accounts based on
fair value:
Inventory
Land
Buildings
Bargain purchase (fair market value
in excess of purchase price)

Student Name:
Class:
Problem 02-19
Account Name
Cash

Receivables

Inventory

Land

Buildings

Equipment

Total Assets

Accounts Payable

Long-term Liabilities

Common Stock

Additional Paid-In Capital

Retained Earnings

Total Liabilities & Equity

Balance

Explanation

Student Name:
Class:
Problem 02-19
Part b. Marshall and Tucker Consolidated Worksheet
MARSHALL COMPANY AND CONSOLIDATED SUBSIDIARY
Consolidation Worksheet
January 1, 2011

Accounts
Debit Balances

Marshall
Company

Cash
Receivables
Inventory
Land
Buildings (net)
Equipment (net)
Investment in Tucker
Total debits
Credit Balances
Accounts payable
Long-term liabilities
Common stock
Additional paid-In capital
Retained earnings, 1/1/11
Total credits

Tucker
Company
$

270,000
360,000
200,000
420,000
160,000

20,000
90,000
140,000
180,000
220,000
50,000

$ 1,410,000

$

700,000

$

$

40,000
200,000
120,000
340,000
700,000

$

150,000

505,000
655,000

$

Consolidation Entries
Debit
Credit

Consolidated
Totals
$

20,000
360,000
500,000
380,000
640,000
210,000

$ 2,110,000

$

190,000
200,000
120,000
845,000
$ 1,355,000

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Correct!
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Given Data P02-23:
MARSHALL COMPANY
Tucker Company outstanding common stock
acquired by Marshall Company
Long-term liabilities issued by Marshall for acquisition
Marshall Company’s $1 par common stock issued
for acquisition – number of shares
Fair market value of Marshall stock
Fees paid by Marshall for arranging acquisition
Stock issuance costs paid by Marshall
Tucker Company inventory – undervalued
Tucker Company land – undervalued
Tucker Company buildings – undervalued

Cash
Receivables
Inventory
Land
Buildings (net)
Equipment (net)
Accounts payable
Long-term liabilities
Common stock – $1 par
Common stock – $20 par
Additional paid-in capital
Retained earnings, 1/1/11

Marshall
Tucker
Company
Company
Book
Book
Value
Value
$
60,000 $
20,000
270,000
90,000
360,000
140,000
200,000
180,000
420,000
220,000
160,000
50,000
(150,000)
(40,000)
(430,000)
(200,000)
(110,000)
(120,000)
(360,000)
(420,000)
(340,000)

100%
$
$

200,000
20,000

$
$
$
$
$
$

10
30,000
12,000
5,000
20,000
30,000

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