Preparation of Consolidated Balance Sheet at Acquisition Date
On January 1, 1999,Tipper Company purchased all of Albert Inc.’s outstanding stock. The post-combination balance sheets of both firms are listed below (dollars in millions):
| Tipper Company | Albert Inc. | |
| Cash | $ 20 | $ 5 |
| Accounts receivable | 120 | 65 |
| Other assets | 950 | 330 |
| Investment in Albert, Inc. | 410 | — |
| Total assets | $1500 | $400 |
| Liabilities | $650 | 160 |
| Shareholders’ equity | 850 | 240 |
| Total liabilities and shareholders’ equity | $1500 | $400 |
Additional information:
1. On the date of acquisition, Albert Inc.’s other assets had a fair market value of $380 million. All other components of net assets had fair market values approximately equal to book values.
2. Albert’s accounts receivable include $25 million that is due from Tipper Company.
Required
a. Assume that Tipper Company will report a consolidated balance sheet on January 1, 1999. Indicate how each of the following items would be valued in the consolidated statement:
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