On January 2, 2011, Par Corporation issues its own $10 par common stock for all the outstanding stock of Sin Corporation in an acquisition. Sin is dissolved. In addition, Par pays $40,000 for registering and issuing securities and $60,000 for other costs of combination. The market price of Par's stock on January 2, 2011, is $60 per share. Relevant balance sheet information for Par and Sin Corporations on December 31, 2010, just before the combination, is as follows (in thousands):

1. Assume that Par issues 25,000 shares of its stock for all of Sin's outstanding shares.a. Prepare journal entries to record the acquisition of Sin.b. Prepare a balance sheet for Par Corporation immediately after the acquisition.2. Assume that Par issues 15,000 shares of its stock for all of Sin's outstanding shares.a. Prepare journal entries to record the acquisition of Sin.b. Prepare a balance sheet for Par Corporation immediately after theacquisition.

Transcribed Image Text:

Par Sin Sin Fair Value Historical Cost Historical Cost $ 240 $ 20 $ 20 120 200 Cash Inventories Other current assets Land Plant and equipment-net 100 200 60 180 160 40 400 200 700 1,300 $2,000 S700 $ 100 Total assets $1,240 $ 400 1,000 $ 100 Liabilities Capital stock, $10 par Additional paid-in capital Retained earnings 200 400 100 200 300 Total liabilities and owners' equity $2,000 $700