Pot Inc. acquired all Seed Inc.'s outstanding $26 par common stock on December 31, 20X3, in exchange for 40,000 shares of its $26 par common stock. Pot's common stock closed at $57.50 per share on a national stock exchange on December 31, 20X3. Both corporations continued to operate as separate businesses maintaining separate accounting records with years ending December 31.
On December 31, 20X4, after year-end adjustments and the closing of nominal accounts, the companies had condensed balance sheet accounts.
Pot Inc. Seed Inc.
Assets
Cash $ 831,000 337,000
Accounts&Other Receivables 2,152,000 852,000
Inventories 2,324,000 1,061,000
Land 654,000 301,000
Depreciable Assets (net) 4,589,000 1,998,000
Investment in Seed Inc. 2,610,000
Long-Term Investnents&Other Assets 884,000 388,000
Total Assets $14,044,000 4,937,000
Liabilities and Stockholders' Equity
Accounts Payable and Other Current Liabilities 2,464,000 $1,133,000
Long-Term Debt 1,900,000 1,300,000
Common Stock, $25 Par Value 3,200,000 1,000,000
Additional Paid-In Capital 2,100,000 190,000
Retained Earnings 4,380,000 1,240,000
Total Liabilities and Stockholders Equity $14,045,000 $4,875,000
Additional Information
1. Pot uses the equity-method of accounting for its investment in Seed.
2. On December 31, 20X3, Seed's assets and liabilities had fair values equal to the book balances with the exception of land, which had a fair value of $390,000. Seed had no land transactions in 20X4.
3. On June 15, 20X4, Seed paid a cash dividend of $6 per share on its common stock.
4. On December 10, 20X4, Pot paid a cash dividend totaling $266,000 on its common stock.
5. On December 31, 20X3, immediately before the combination, the stockholders' equity balance was:
Pot Inc Seed Inc.
Comnon Stock $2,189,000 1,000,000
Additional Paid-In Capital 1,652,000 182,000
Retained Earnings 4,013,000 989,000
$7,854,000 $2,171,000
6. The 20x4 net income amounts according to the separate books of Pot and Seed were $898,000 (exclusive of equity in Seed's earnings) and $590,000, respectively.
Required: Prepare a consolidated balance sheet worksheet for Pot and its subsidiary, Seed, for December 31, 20X4.
Answers: 2
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Pot Inc. acquired all Seed Inc.'s outstanding $26 par common stock on December 31, 20X3, in exchange...
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