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Can someone please help with this Asset acquisition vs. stock acquisition (fair value is different from book value) The following financial statement information is for
Can someone please help with this
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, 2013. On January 1, 2013, the investor company's common stock had a traded market value of $70 per share, and the investee company's common stock had a traded market value of $32 per share. Book Values Fair Values Investor Investee Investor Investee Receivables & inventories $200,000 $100,000 $180,000 $90,000 Land 400,000 200,000 600,000 300,000 Property & equipment 450,000 200,000 500,000 260,000 Trademarks & patents 300,000 160,000 Total assets $1,050,000 $500,000 $1,580,000 $810,000 Liabilities $300,000 $160,000 $360,000 $190,000 Common stock ($1 par) 40,000 20,000 Additional paid-in capital 560,000 300,000 Retained earnings 150,000 20,000 Total liabilities & equity $1,050,000 $500,000 Net assets $750,000 $340,000 $1,220,000 $620,000 Support 0 Required (Parts a. and b. are independent of each other.) a. Assume that the investor company issued 9,500 new shares of the investor company's 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 Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's net assets: Receivables & Inventories $ Land Property & Equipment Trademarks & Patents Investment in Investee Goodwill Total Assets Liabilities Common Stock (51 par) Additional Paid-In Capital Retained Earnings Total Liabilities and Equity S O O O O OO $ $ 0 0 0 0 0 0 0 b. Assume that the investor company issued 9,500 new shares of the investor company's common stock in exchange for all of the investee company's common stock. The financial information presented, above, was prepared immediately before this transaction. Provide the Investor Company's balances (i.e., on the investor's books, before consolidation) for the following accounts immediately following the acquisition of the investee's net assets: Receivables & Inventories $ 0 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 $ 0 0 0 $ 0 $ 0 0 0 0 0 Step by Step Solution
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