On January 1, 20XI, Alpha Corporation acquired all of the assets and liabilities of Bravo Company by issuing shares of its \(\$ 3\) par value stock to the owners of Bravo Company in an exchange recorded as a purchase. Alpha also made a cash payment to Banker Corporation as a finder's fee. Partial balance sheet data for Alpha and Bravo before the cash payment and issuance of shares and a combined balance sheet following the business combination are as follows:

\section*{Required}

a. What number of its \(\$ 5\) par value shares did Bravo Company have outstanding at January 1, 20X1?

b. Assuming all of Bravo's shares were issued when the company was started, what was the price per share received at the time of issue?

c. How many shares of Alpha Company were issued at the date of combination?

d. What was the market value of the shares of Alpha Company issued at the date of combination?
\(e\). What amount of cash did Alpha pay to Banker Corporation as a finder's fee?

f. What was the fair value of Bravo's inventory at the date of combination?
g. What was the fair value of Bravo's net assets at the date of combination?
\(h\). What amount of goodwill, if any, will be reported in the combined balance sheet following the combination?

Transcribed Image Text:

Alpha Company Bravo Company Cash Accounts Receivable Inventory Buildings and Equipment (net) Book Value Book Value Fair Value $ 65,000 105.000 $ 15,000 30.000 210,000 90.000 $ 15.000 30,000 ? 400,000 210,000 293,000 Combined Entity $ 56,000 135,000 320,000 693,000 Goodwill Total Assets Accounts Payable Bonds Payable ? $780,000 $345,000 $448,000 $ ? $ 56.000 $ 22,000 200,000 Common Stock 96,000 120,000 70,000 $ 22.000 120,000 $ 78,000 320,000 117.000 Additional Paid-In Capital 234,000 42,000 577,000 Retained Earnings 194.000 91,000 Total Liabilities and Equities $780.000 $345.000 $142.000