acquisition with special valuations

Acquisition with special valuations. Pederson Company acquires the assets of shelby Company by issuing 100,000 of its $1 per value shares of common stock. The shares have a fair value of $20 each. Just prior to the acquisition, Shelby's balance sheet is as follows: Fair values agree with book values except for the building, which is appraised at $450,000. The following additional information is available: The equipment will he sold for an estimated price of $200,000. A 10% commission will be paid to a broker. A major R&D project is underway. The accumulated costs are $56,000, and the estimated value of the work is $90,000, A warranty attaches to products sold in the past. the estimated future repair costs under the warranty arc $40,000. Shelby has a customer list that has value. It is estimated that the list will provide additional income of S100,000 for three years. An intangible asset such as this is valued at a 20% rate of return. Record the acquisition of Shelby Company on the books of Pederson Company. Provide calculations where needed. Acquisition with special valuations. Pederson Company acquires the assets of shelby Company by issuing 100,000 of its $1 per value shares of common stock. The shares have a fair value of $20 each. Just prior to the acquisition, Shelby's balance sheet is as follows: Fair values agree with book values except for the building, which is appraised at $450,000. The following additional information is available: The equipment will he sold for an estimated price of $200,000. A 10% commission will be paid to a broker. A major R&D project is underway. The accumulated costs are $56,000, and the estimated value of the work is $90,000, A warranty attaches to products sold in the past. the estimated future repair costs under the warranty arc $40,000. Shelby has a customer list that has value. It is estimated that the list will provide additional income of S100,000 for three years. An intangible asset such as this is valued at a 20% rate of return. Record the acquisition of Shelby Company on the books of Pederson Company. Provide calculations where needed