the balance sheets of petron co and seeview co on june 29 year 2 were as follows on 4375002

The balance sheets of Petron Co. and Seeview Co. on June 29, Year 2, were as follows: On June 30, Year 2, Petron Co. purchased 90% of the outstanding shares of Seeview Co. for $40,500 cash. Legal fees involved with the acquisition were an additional $1,000. These two transactions were the only transaction on this date. The carrying amounts of Seeview’s net assets were equal to fair value except for the following: Fair value Inventory …….. $8,750 Plant assets …… 67,500 Intangible assets ….. 7,500 Long-term debt …… 32,500 Seeview has a five-year agreement to supply goods to Bardier. Both Petron and Seeview believe that Bardier will renew the agreement at the end of the current contract. The agreement is between Seeview and Bardier; it cannot be transferred to another company without Seeview’s consent. Seeview does not report any value with respect to this contract on its balance sheet. However, an independent appraiser feels that this contract is worth $10,000. Required: (a) Assume that Petron Co. is a public entity. Prepare the consolidated balance sheet of Petron Co. on June 30, Year 2. (b) Assume that Petron is a private entity, uses ASPE, and chooses to use the equity method to account for its investment in Seeview. Prepare Petron’s June 30, Year 2, separate-entity balance sheet after the business combination. View Solution:
The balance sheets of Petron Co and Seeview Co on

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