Dickinson Corporation is considering the acquisition of Williston Company through the acquisition of Williston’s common stock

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.


Click here for the solution: Dickinson Corporation is considering the acquisition of Williston Company through the acquisition of Williston’s common stock

A partial trial balance of Dickinson Corporation is as follows on December 31, 2010

A partial trial balance of Dickinson Corporation is as follows on December 31, 2010.

____________________________________Dr.__________Cr.
Supplies on hand___________________$ 2,500
Accrued salaries and wages_______________________ $ 1,500
Interest Receivable__________________ 5,100
Prepaid insurance___________________ 90,000
Unearned rent ___________________________________ -0-
Accrued interest payable __________________________ 15,000

Additional adjusting data:
1. A physical count of supplies on hand on December 31, 2010, totaled $1,100.
2. Through oversight, the Accrued Salaries and Wages account was not changed during 2010. Accrued salaries and wages on December 31, 2010, amounted to $4,400.
3. The Interest Receivable account was also left unchanged during 2010. Accrued interest on investments amounts to $4,350 on December 31, 2010.
4. The unexpired portions of the insurance policies totaled $65,000 as of December 31, 2010.
5. $24,000 was received on January 1, 2010 for the rent of a building for both 2010 and 2011. The entire amount was credited to rental income.
6. Depreciation for the year was erroneously recorded as $5,000 rather than the correct figure of $50,000.
7. A further review of depreciation calculations of prior years revealed that depreciation of $7,200 was not recorded. It was decided that this oversight should be corrected by a prior period adjustment.

(a) Assuming that the books have not been closed, what are the adjusting entries necessary at December 31, 2010? (Ignore income tax considerations.)
(b) Assuming that the books have been closed, what are the adjusting entries necessary at December 31, 2010? (Ignore income tax considerations.)

Click here for the solution: A partial trial balance of Dickinson Corporation is as follows on December 31, 2010