Dickinson Corporation is considering the acquisition of Williston Company through the acquisition of Williston’s common stock. Dickinson Corporation will issue 15,000 shares of its $5 par common stock, with a fair value of $30 per share, in exchange for all 10,000 outstanding shares of Williston Company’s voting common stock. The acquisition meets the criteria for a tax-free exchange as to the seller. Because of this, Dickinson Corporation will be limited for future tax returns to the book value of the depreciable assets. Dickinson Corporation falls into the 30% tax bracket. The appraisal of the assets of Williston Company shows that the inventory has a fair value of $120,000, and the depreciable fixed assets have a fair value of $250,000 and a 10-year life. Any remaining excess is attributed to goodwill. Williston Company has the following balance sheet just before the acquisition: Assets Cash $ 40,000 Accts Rec 150,000 Inventory 100,000 Depreciable Assets 210,000 $500,000 Liabilities & Equities Current Liabilities $ 50,000 Bonds Payable 100,000 C Stk ($10 par) 100,000 Retained Earnings 250,000 $500,000
Required: Prepare the elimination entries that would be made on the consolidated worksheet on the date of acquisition.
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