9.

On May 1, Donovan Company reported the following account balances:

Current assets		$	100,500
Buildings & equipment (net)			269,500
Total assets		$	370,000
Liabilities		$	119,000
Common stock			150,000
Retained earnings			101,000
Total liabilities and equities		$	370,000

On May 1, Beasley paid $409,800 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $24,700 in accounts payable for legal and accounting fees.

Beasley also agreed to pay $86,900 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $27,500. In determining its offer, Beasley noted the following:

	Donovan holds a building with a fair value $30,500 more than its book value.
	Donovan has developed unpatented technology appraised at $26,700, although is it not recorded in its financial records.
	Donovan has a research and development activity in process with an appraised fair value of $49,100. The project has not yet reached technological feasibility.
	Book values for Donovans current assets and liabilities approximate fair values.

How much should Beasley record as total assets acquired in the Donovan merger?

$437,300.

$556,300.

$409,800.

$488,700.

10.

Prior to being united in a business combination, Atkins, Inc., and Waterson Corporation had the following stockholders equity figures:

	Atkins	Waterson
Common stock ($1 par value)	$232,000	$ 72,000
Additional paid-in capital	116,000	33,500
Retained earnings	313,000	120,250

Atkins issues 69,000 new shares of its common stock valued at $3 per share for all of the outstanding stock of Waterson. Immediately afterward, what are consolidated Additional Paid- In Capital and Retained Earnings, respectively?

$251,500 and $433,250.

$254,000 and $313,000.

$149,500 and $433,250.

$143,500 and $313,000.