Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2012. As of that date, Jackson had the following trial balance: During 2012, Jackson reported net income of $96,000 while paying dividends of $12,000. During 2013, Jackson reported net income of $132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common stock of Jackson Co. for $588,000 in cash. As of January 1, 2012, Jackson\'s land had a fair value of $102,000, its buildings were valued at $188,000, and its equipment was appraised at $216,000. Any excess of consideration transferred over fair value of assets and liabilities acquired is due to an unrecorded patent to be amortized over 10 years. Matthews decided to use the equity method for this investment. Prepare Excess Allocation Worksheet/Amortization Calculations for date of acquisition. Prepare consolidation worksheet journal entries for December 31, 2012 and December 31, 2013. Prepare consolidation worksheet for December 31, 2013 only - either balance sheet only or balance sheet and retained earnings statement. (See next page for 12/31/13 financial information for both companies.) Solution This question cannot be answered as there is a lack of information about how much stake has been acquired by Mathew in Jacksons. However, profit loss on acocunt of this merger will be as under: All Assets: Receivables-50000 Land-102000 Building-188000 Equipment-216000 Cash -70000 Inventory-110000 Supplies-20000 Total: 756000 Total Liabilities: Accounts Payables-60000 Long term liabilities-180000 Total: 240000 Net Assets to be taken over: 516000 Consideration Paid: 588000 Excess paid: 72000 (This will be debited towards Patents to be amortised over 10 years) .

1. Matthews Co. acquired all of the common stock of Jackson Co. on January 1, 2012. As of that
date, Jackson had the following trial balance: During 2012, Jackson reported net income of
$96,000 while paying dividends of $12,000. During 2013, Jackson reported net income of
$132,000 while paying dividends of $36,000. Assume that Matthews Co. acquired the common
stock of Jackson Co. for $588,000 in cash. As of January 1, 2012, Jackson's land had a fair value
of $102,000, its buildings were valued at $188,000, and its equipment was appraised at
$216,000. Any excess of consideration transferred over fair value of assets and liabilities
acquired is due to an unrecorded patent to be amortized over 10 years. Matthews decided to use
the equity method for this investment. Prepare Excess Allocation Worksheet/Amortization
Calculations for date of acquisition. Prepare consolidation worksheet journal entries for
December 31, 2012 and December 31, 2013. Prepare consolidation worksheet for December 31,
2013 only - either balance sheet only or balance sheet and retained earnings statement. (See next
page for 12/31/13 financial information for both companies.)
Solution
This question cannot be answered as there is a lack of information about how much stake has
been acquired by Mathew in Jacksons. However, profit loss on acocunt of this merger will be as
under:
All Assets:
Receivables-50000
Land-102000
Building-188000
Equipment-216000
Cash -70000
Inventory-110000
Supplies-20000

2. Total: 756000
Total Liabilities:
Accounts Payables-60000
Long term liabilities-180000
Total: 240000
Net Assets to be taken over: 516000
Consideration Paid: 588000
Excess paid: 72000 (This will be debited towards Patents to be amortised over 10 years)