Advanced Accounting

The following are preliminary financial statements for Red Co. and Orange Co. for the year ending December 31, 2013 prior to Red's acquisition of Orange.

On December 31, 2013 (subsequent to the preceding statements), Red exchanged 10,000 shares of its $10 par value common stock for all of the outstanding shares of Orange. Red's stock on that date has a fair value of $60 per share. Red was willing to issue 10,000 shares of stock because Orange's land was appraised at $200,000. Red also paid $14,000 to several attorneys and accountants who assisted in creating this combination.

#1 Compute the value of the Goodwill account on the date of acquisition, 12/31/2013.

Consideration given
Book value acquired
Excess consideration given over book value
Allocations
Excess cost not identified - Goodwill

#2 Prepare Red Co.'s entry to record the acquisition.

#3 Assuming that these two companies retained their separate legal identities, prepare a consolidation worksheet as of December 31, 2013 after the acquisition transaction is completed.

Account
Income Statement
Sales
Expenses
Net income

Statement of Retained Earnings
Retained earnings, 1/1/2013
Net income (above)
Dividends paid
Retained earnings, 12/31/2013

Balance Sheet
Current asets
Investment in Orange Co.

Land
Buildings (net)
Goodwill
Total assets

Liabilities
Common stock
Additional paid-in capital
Retain earnings, 12/31/2013
Total liabilities and stockholders' equity.