Asset acquisition vs. stock acquisition (fair value is different from book value) The following financial statement information is for an investor company and an investee company on January 1, 2016. On January 1, 2016, the investor companys common stock had a traded market value of $35 per share, and the investee companys common stock had a traded market value of $31 per share.

	Book Values		Fair Values
	Investor	Investee	Investor	Investee
Receivables & inventories	$150,000	$75,000	$135,000	$67,500
Land	300,000	150,000	450,000	225,000
Property & equipment	337,500	150,000	375,000	195,000
Trademarks & patents			225,000	120,000
Total assets	$787,500	$375,000	$1,185,000	$607,500
Liabilities	$225,000	$120,000	$270,000	$142,500
Common stock ($1 par)	30,000	15,000
Additional paid-in capital	420,000	225,000
Retained earnings	112,500	15,000
Total liabilities & equity	$787,500	$375,000
Net assets	$562,500	$255,000	$915,000	$465,000

Required (Parts a. and b. are independent of each other.) a. Assume that the investor company issued 14,250 new shares of the investor companys common stock in exchange for all of the individually identifiable assets and liabilities of the investee company. The financial information presented, above, was prepared immediately before this transaction. Provide the Investor Companys balances (i.e., on the investors books, before consolidation) for the following accounts immediately following the acquisition of the investees net assets:

Receivables & Inventories
Land
Property & Equipment
Trademarks & Patents
Investment in Investee
Goodwill
Total Assets
Liabilities
Common Stock ($1 par)
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equity

b. Assume that the investor company issued 14,250 new shares of the investor companys common stock in exchange for all of the investee companys common stock. The financial information presented, above, was prepared immediately before this transaction. Provide the Investor Companys balances (i.e., on the investors books, before consolidation) for the following accounts immediately following the acquisition of the investees net assets:

Receivables & Inventories
Land
Property & Equipment
Trademarks & Patents
Investment in Investee
Goodwill
Total Assets
Liabilities
Common Stock ($1 par)
Additional Paid-In Capital
Retained Earnings
Total Liabilities and Equity