EXERCISE 3-2

Any difference between book value of net assets and the value implied by the purchase price relates to subsidiary property plant and equipment except for case (c). In case (c) assume that all book values and fair values are the same.

Stock Purchase Entries LO 7 LO 8

On January 1, 2019, Polo Company purchased 100% of the common stock of Save Company by issuing 40,000 shares of its (Polos) $10 par value common stock with a market price of $17.50 per

Exercises

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share. Polo incurred cash expenses of $20,000 for registering and issuing the common stock. The stockholders equity section of the two companies balance sheets on December 31, 2018, were: