Business, 13.10.2020 05:01 sarahhmao

Panoz Corporation issues 1 million shares of stock, valued at $50 per share, to acquire all of the stock of Shelby, Inc. Panoz accounts for the acquisition as a stock acquisition. Balance sheet information at the date of acquisition is as follows (in millions): Panoz Corp. Shelby, Inc.
Book Value Dr (Cr) Book Value Dr (Cr) Fair Value Dr (Cr)
Cash and receivables $10 $5 $6
Inventory 40 10 7
Property and equipment, net 350 100 90
Investment in Shelby 50 -- --
Current liabilities (60) (20) (20)
Long-term liabilities (200) (80) (78)
Capital stock (120) (10)
Retained earnings (100) (6)
Accumulated other comprehensive income 10 (1)
Treasury stock 20 2
Total $0 $0

Shelby has no previously unrecorded identifiable intangible assets.

Required:
a. Calculate the amount of goodwill recognized for this acquisition.
b. Prepare the consolidation working paper at the date of acquisition.
c. Prepare the consolidated balance sheet, in good form, at the date of acquisition.

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