Prepare balance sheet after purchase business combination On January 2, 2006, Pelican Corporation enters into a business combination with Seabird Corporation in which Seabird is dissolved. Pelican pays $825,000 for Seabird, the consideration consisting of 33,000 shares of Pelican $10 par common stock with a market value of $25 per share. In addition, Pelican pays the following expenses in cash at the time of the merger:
Finders’ fee $ 35,000 Accounting and legal fees 65,000 Registration and issuance costs of securities 40.000 $140,000 Balance sheet and fair value information for the two companies on December 31, 2005, immedi¬ ately before the merger, is as follows (in thousands):
Pelican Seabird Seabird Book Value Book Value Fair Value Cash $ 150 $ 30 $ 30 Accounts receivable—net 230 50 40 Inventories 520 80 120 Land 400 100 150 Buildings—net 1,000 200 300 Equipment—net 500 300 250 Total assets $2,800 S760 S890 Accounts payable $ 300 $ 40 $ 40 Note payable 600 200 180 Capital stock, $10 par 800 300 Other paid-in capital 600 50 Retained earnings Total liabilities and 500 170 owners’ equity $2,800 $760 REQUIRED: Prepare a balance sheet for Pelican Corporation as of January 2, 2006, immediately after the merger, assuming the merger is treated as a purchase.