Asset Purchase, Stock Contingency On January 1, 2003, Platz Company acquired all the net assets of Satz Company by issuing 75,000 shares of its $10 par value common stock to the stockholders of Satz Company.
During negotiations Platz Company agreed that their common stock would have at least its current value of $50 per share on January 1, 2004. The market price of Platz Company’s common stock on January 1, 2004, was $40 per share. LO4 Required:
Prepare the journal entry on Platz Company’s books on January 1, 2004, assuming:
A. The contingency is settled in cash.
B. The contingency is settled by issuing additional shares of stock.