Balance sheet data for Herb Corporation and Aside Chemical Company at December 31, 2007 follow:

Required:
1. Assume that on January 1, 2008, Herb sold an additional 100,000 shares of its stock to its existing shareholders for \($425,000\). It then used the stock issue's entire proceeds to buy all of Asides shares. Prepare a consolidated balance sheet after the acquisition using the purchase method.
2. Assume the preceding facts except that Herb acquired only 80% of the stock for a cash payment of \($425,000\). How would the consolidated balance sheet differ from that in requirement 1?
3. Now assume a slightly altered set of initial conditions. While the respective December 31, 2007 balance sheet data for the two companies were identical to those shown, the 100,000 shares of Herb stock were not sold to existing Herb Corporation shareholders. Assume instead that these 100,000 shares (which had a January 1, 2008 market value of $425,000)
were issued to Aside’s shareholders in exchange for all 100,000 shares of Aside’s stock.
Prepare a consolidated balance sheet after the acquisition under the pooling method.
(Note to student: Ignore the fact that the dates in this problem are after SFAS No. 141 that eliminated the pooling method.)

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($ in thousands) Herb Aside Assets $850 $400 Liabilities $275 $100 Common stock (par value, $1) 200 100 Other equity (paid-in capital plus retained earnings) 375 200 $850 $400