a chapter 1 Required Company? $5, What was Plumb's book value of the total What amount did Plumb report as its investment in Stew after the d. What impact did the transfer of assets and accounts payable have on the amount reporte e What number of shares of war value stock did Stew issue to Plumb? the consolidated entity reported a shares outstanding? What impact did the transfer of assets and accounts payable have on the amount that Plumb and Plumb as total assets? on August 31, 20X3. Seed's fair value 20 1-5 Acquisition in Multiple Steps acquire 85 percent of the common stock of Seed P1-27 Peal Corporation issued 4,000) shares of its SIO par value stock with a market value of $85,000 to mon stock for $9,000 on January 31, 20XT, and had carried this investment at fair value on its was determined to be $100,000 on that date. Per purchased 15 percent of Seed's com- ately prior to acquiring the remaining 85 percent of Seed's shares. On August 31, 20X3, Peal also paid appraisal fees of $3.500 and stock issue costs of $2,000 incurred in completing the acquisition balance. Peal reported this investment at $15,000 on its balance sheet at August 31. 20X3, inmedi- of the additional shares. 1-5 Required Give the journal entries to be recorded by Peal in completing the acquisition of the additional shares of Seed P1-28) Journal Entries to Record a Business Combination On January 1, 20X2, Prost Company acquired all of SKK Corporation's assets and liabilities by issuing 24,000 shares of its $4 par value common stock. At that date, Prost shares were selling at $22 per share. Historical cost and fair value balance sheet data for SKK at the time of acquisition were as follows: Fair Value Advanced Study Guide .com Historical Cost Balance Sheet Item $ 28,000 122,000 470,000 Inesely $ 28,000 94,000 600,000 (240,000 $482,000 $620,000 08/18 Cash & Receivables Inventory Buildings & Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Notes Payable Common Stock ($10 par value) Retained Earnings Total Liabilities & Equities $ 41.000 63,000 $ 41,000 65,000 160,000 216.000 $482,000 Prost paid legal fees for the transfer of assets and liabilities of $14,000. Prost also paid audit fees $21,000 and listing application fees of $7,000, both related to the issuance of new shares. Required Prepare the journal entries made by Prost to record the business combination. P1-29 Recording Business Combinations Plint Corporation exchanged shares of its $2 par common stock for all of Sark Company's a and liabilities in a planned merger. Immediately prior to the combination, Sark's assets and lia ties were as follows: Chapter 1 Interior quand elle Other Emile 5 Assets ) Cash & Equivalents Accounts Receivable inventory Land Buildings Equipment Accumulated Depreciation Total Assets 41.000 73.000 164000 200,000 1520.000 1421.000 52,195,000 0.000 Liabilities & Equities Accounts Payable Short-Term Notes Payable Bonds Payable Common Stock 1810 par Additional Paidan Capital Retained Esmings Total Unities & Equities $ 35,000 50,000 500.000 325.000 275.000 $2.165.000 To 1 (P1-30 Immediately prior to the combination, Plint reported $250,000 additional paid-in capital and $1,350,000 retained earnings. The fair values of Sark's assets and liabilities were equal to their book values on the date of combination except that Sark's buildings were worth $1,500,000 and its equipment was worth $300,000. Costs associated with planning and completing the business combination totaled $38,000, and stock issue costs totaled $22,000. The market value of Plint's stock at the date of combination was 54 per share. Required Prepare the journal entries that would appear on Plint's books to record the combination if Plint issued 450,000 shares LO 1-5 P1-30 Business Combination with Goodwill Pancor Corporation paid cash of S178,000 to acquire Sink Company's net assets on February 1, 20X3. The balance sheet data for the two companies and fair value information for Sink immedi- ately before the business combination were Pancor Corporation Sink Company Advanced Balance Sheet Item Book Value Study Guide Book Value Fair Value .com Cash $240,000 $ 20.000 $ 20.000 Accounts Receivable 140,000 35.000 35,000 Inventory 170.000 30,000 50.000 Patents 80,000 40.000 60.000 Buildings & Equipment 380.000 310,000 150.000 Less: Accumulated Depreciation (190,000 (200.000 Total Assets $820,000 $235.000 $315.000 Accounts Payable S 85.000 $ 55,000 $ 55.000 Notes Payable 150,000 120,000 120,000 Common Stock $10 par value 200.000 18.000 $6 par value Additional Pald-in Capital 160,000 10,000 Retained Earnings 225.000 32.000 Total Liabilities & Equities $820,000 $235.000 Required a. Give the journal entry recorded by Pancor Corporation when it acquired Sink's net assets b. Prepare a balance sheet for Pancor immediately following the acquisition c. Give the journal entry to be recorded by Pancor if it acquires all of Sink's common stock (instead of Sink's net assets) for $178,000