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Consolidated Account balances for Arlington and Winston

Winston has the following account balances as of Feb 1:

Inventory \$600,000.00
Land \$50,000.00
Buildings (net) (valued at \$1,000,000) \$900,000.00
Common stock (\$10 per value) \$(800,000.00)
Retained earnings 1/1 \$(1,100,000.00)
Revenues \$(600,000.00)
Expenses \$500,000.00

Arlington pays \$1.4 million cash and issues 10,000 shares of its \$30 per value common stock (valued at \$80 per share) for all of Winston's outstanding stock. Stock issuance costs amount to \$30,000. Prior to recording these newly issued shares, Arlington reports a Common stock account of \$900,000 and Additional Paid-In Capital of \$500,000. For each of the following accounts, determine what balance would be included in a Feb 1 consolidation:

a) Goodwill
b) Expenses
c) Retained Earnings 1/1
d) Buildings

Assume that Arlingtion pays cash of \$2.3 million. No stock is issued. An additional \$40,000 is paid in direct combination costs. For each of the follwing accounts, determine what balance would be included in a Feb 1 consolidation:
a) Goodwill
b) Expenses
c) Retained Earnings 1/1
d) Buildings

Solution Summary

The solution calculates Consolidated Account balances for Arlington and Winston

\$2.19