Problem - On December 31, 20X9, Thessaly Corporation acquired all of Ionian Company's common shares, for $560,000 cash. On that date, Ionian's balance sheet appeared as follows:
|
Assets
|
|
Liabilities
|
|
|
Cash
|
$80,000
|
Current Payables
|
$50,000
|
|
Accounts Receivables
|
40,000
|
Notes Payable
|
70,000
|
|
Inventory
|
100,000
|
Stockholders' Equity
|
|
|
Land
|
120,000
|
Common Stock
|
150,000
|
|
Building and Equipment (net)
|
260,000
|
Additional Capital
|
200,000
|
|
|
Retained Earnings
|
130,000
|
|
|
|
|
|
Total
|
$600,000
|
Total
|
$600,000
|
The fair values of all of Ionian's assets and liabilities were equal to their book values except for the following:
|
Fair Value
|
|
Inventory
|
$140,000
|
|
Land
|
150,000
|
|
Buildings and Equipment
|
270,000
|
In recording this acquisition, push-down accounting was used.
Required:
1) Record the acquisition of Ionian's stock on Thessaly's books on December 31, 20X9.
2) Record any entries that would be made on December 31, 20X9, on Ionian's books related to the business combination.
3) Present all consolidating entries that would appear in the worksheet to prepare a consolidated balance sheet immediately after the combination.