Palto issues 20,000 of its $5 par value common stock shares, with a fair value of $35

Question:

Palto issues 20,000 of its $5 par value common stock shares, with a fair value of $35 each, for a 100% interest in Sword Company on January 1, 2011. The balance sheet of Sword Company on that date is as follows:

On the purchase date, the buildings and equipment are understated $50,000 and have a remaining life of 10 years. Sword has tax loss carryovers of $200,000. They are believed to be fully realizable at a tax rate of 30%. $40,000 of the tax loss carryovers will be utilized in 2011.
The purchase is a tax-free exchange. The tax rate applicable to all transactions is 30%. Any remaining excess is attributed to goodwill.
Prepare a value analysis and a determination and distribution of excess schedule for this investment.

Balance Sheet
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... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... 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,...