Assume that Wal-Mart decided to acquire major retailing rival Target Corporation on January 31, 2010. Targets fiscal

Question:

Assume that Wal-Mart decided to acquire major retailing rival Target on January 31, 2010. Target’s fiscal year ended on January 30, 2010, but you may assume that the year ends are identical to keep the calculations simpler. Visit the two firms’ Web sites to acquire their annual reports on this date (Wal-Mart lists this as the 2010 annual report, while Target lists this as a 2009 annual report).
Assumptions:
Wal-Mart issued 1 billion shares of $.10 to acquire 100% of Target’s outstanding common shares.
Wal-Mart stock had a fair market value of $50 per share on this date.
Fair values of all assets and liabilities are equal to book values, except as noted.
■ Inventories were undervalued by 10 percent.
■ Property and equipment were undervalued by 20 percent, except construction in progress, where book value equaled fair value.
REQUIRED
1. Prepare all the journal entries on Wal-Mart’s books to account for the acquisition of Target. Assume Target’s Accumulated Other Comprehensive Loss of $581 million is also acquired. Assume Target is dissolved.
2. Prepare the of Wal-Mart immediately after the acquisition of Target.

Common Stock
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...