1. On January 1, 2017, Benis inc. acquires 100% of Bharat Corp.'s outstanding common stock by exchanging 90,000 shares of $5.00 par value common voting stock and $1,100,000 in cash. On January 1,2017 Bonis voting common stock had a market value of $28.00 per share. Legal costs pertaining to the acquisition will be $180,000. Bharar's 1/1/2017 Balance sheet prior to recording the acquisition is listed below. Bharat Co: Book Value Cash Fair Value 430,000 160,000 Accounts Receivable Inventory 340,000 430,000 160,000 200,000 230,000 450,000 185,000 Land Building, net Equipment, net In process R&D 3105k 400,000 550,000 260,000 885,000 80,000 (170,000) (400,000) Zg$35k Customer Relationship Lund. stole Accounts Payable Bonds Payable Common Stocks, $3 par Paid in Capital Retained Earnings 1/1/17 (180,000) (440,000) (540,000) (60,000) (435,000) Assume at date of acquisition (January 1, 2017) before completion of the transaction, Benis Corp had the following net assets and equity: Cash $4,900,000 Goodwill Accounts Receivable $2,200,000 30,000 y 28 - 3520.00 Building, net $6,000,000 Bonds Payable (4.000.000) Common Stock $5 par (2.000.000) Paid in Capital (2,100,000) Retained Earning 1/1/2017 (5,000,000) L1,100,000 1 ooooo Investr 3,620,000 A-L - 2,535,000 1,085,000 *** use unissued but authorized shares in the purchase Goodwill f. Using the facts in part 1, if there is also an additional cash contingent payment of $300,000 based on achieving a lovel of earnings in 2 years with a fair value of 1/1/2017 of $150,000 and on 12/31/2017 of $200,000. How is that accounted for at acquisition date ) and the subsequent date? 1. On January 1, 2017, Benis inc. acquires 100% of Bharat Corp.'s outstanding common stock by exchanging 90,000 shares of $5.00 par value common voting stock and $1,100,000 in cash. On January 1,2017 Bonis voting common stock had a market value of $28.00 per share. Legal costs pertaining to the acquisition will be $180,000. Bharar's 1/1/2017 Balance sheet prior to recording the acquisition is listed below. Bharat Co: Book Value Cash Fair Value 430,000 160,000 Accounts Receivable Inventory 340,000 430,000 160,000 200,000 230,000 450,000 185,000 Land Building, net Equipment, net In process R&D 3105k 400,000 550,000 260,000 885,000 80,000 (170,000) (400,000) Zg$35k Customer Relationship Lund. stole Accounts Payable Bonds Payable Common Stocks, $3 par Paid in Capital Retained Earnings 1/1/17 (180,000) (440,000) (540,000) (60,000) (435,000) Assume at date of acquisition (January 1, 2017) before completion of the transaction, Benis Corp had the following net assets and equity: Cash $4,900,000 Goodwill Accounts Receivable $2,200,000 30,000 y 28 - 3520.00 Building, net $6,000,000 Bonds Payable (4.000.000) Common Stock $5 par (2.000.000) Paid in Capital (2,100,000) Retained Earning 1/1/2017 (5,000,000) L1,100,000 1 ooooo Investr 3,620,000 A-L - 2,535,000 1,085,000 *** use unissued but authorized shares in the purchase Goodwill f. Using the facts in part 1, if there is also an additional cash contingent payment of $300,000 based on achieving a lovel of earnings in 2 years with a fair value of 1/1/2017 of $150,000 and on 12/31/2017 of $200,000. How is that accounted for at acquisition date ) and the subsequent date
