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Consolidation Accounting

After an intense period of negotiation, Global Enterprises Corporation agreed to purchase all of the outstanding common shares of The Carlton Corporation. The agreed-upon price was $29.4 million, payable in Global Enterprise shares. According to the agreement, Global Enterprises would issue one share of its common stock in exchange for each share of The Carlton Corporation. Following the exchange, The Carlton Corporation would become a wholly-owned subsidiary of Global Enterprises. At the time of the negotiations, the market price of Global Enterprises shares was $24.50 per share. Presented below are the pre-acquisition balance sheets of Global Enterprises and The Carlton Corporation:

Pre-acquisition Balance Sheets	Global Enterprises Corporation	The Carlton Corporation
Assets
Cash	$ 8,000,000	$ 2,500,000
Short-term investments	5,000,000	3,500,000
Accounts receivable (net)	7,500,000	5,000,000
Inventory (LIFO)	19,000,000	9,500,000
Property & equipment (net)	38,000,000	23,000,000
Other assets	4,500,000	1,500,000
Total assets	$82,000,000	$45,000,000
Liabilities & Shareholders' Equity
Accounts payable	$ 9,500,000	$ 7,500,000
Other current liabilities	4,000,000	3,000,000
Bonds payable	11,000,000	----
Other long-term debt	7,500,000	12,500,000
Common stock ($10 par)	12,000,000	----
Common stock ($5 par)	----	6,000,000
Capital in excess of par value	7,000,000	2,000,000
Retained earnings	31,000,000	14,000,000
Total liabilities & shareholders' equity	$82,000,000	$45,000,000

As part of Global Enterprises due diligence, the company determined that while the liabilities of The Carlton Corporation were fairly valued, some of the companys assets were not fairly valued. The fair value of Carltons assets were as follows:

Asset	Fair Maket Value	Under/(Over) Statement
Cash	$ 2,500,000	$ 0
Short-term investments	4,500,000	1,000,000
Accounts receivable (net)	3,500,000	(1,500,000)
Inventory (LIFO)	13,000,000	3,500,000
Property & equipment (net)	28,000,000	5,000,000
Other assets	0	(1,500,000)
Total	$51,500,000	$6,500,000

Required

Prepare the consolidated balance sheet immediately following the acquisition using consolidation accounting.

Remember to use a negative sign with adjustment answers, when appropriate.

Pre-Consolidation
		Global Enterprises		The Carlton Corp.	Adjustments		Consolidated
Cash		Answer		Answer	Answer		Answer
Short-term investments		Answer		Answer	Answer		Answer
Accounts receivable (net)		Answer		Answer	Answer		Answer
Inventory (LIFO)		Answer		Answer	Answer		Answer
Property & equipment (net)		Answer		Answer	Answer		Answer
Other assets		Answer		Answer	Answer		Answer
Investment in Carlton		Answer		Answer	Answer		Answer
Goodwill		Answer		Answer	Answer		Answer
Total		Answer		Answer			Answer
Liabilities & Shareholders' Equity
Accounts payable		Answer		Answer	Answer		Answer
Other current liabilities		Answer		Answer	Answer		Answer
Bonds payable		Answer		Answer	Answer		Answer
Other long-term debt		Answer		Answer	Answer		Answer
Common stock ($10 par)		Answer		Answer	Answer		Answer
Common stock ($5 par)		Answer		Answer	Answer		Answer
Capital in excess of par value		Answer		Answer	Answer		Answer
Retained earnings		Answer		Answer	Answer		Answer
Total		Answer		Answer			Answer

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