Question
Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts. Padre
Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts.
Padre Company | Sol Company | ||||||||||||||
Book Values | Book Values | Fair Values | |||||||||||||
12/31 | 12/31 | 12/31 | |||||||||||||
Cash | $ | 400,000 | $ | 120,000 | $ | 120,000 | |||||||||
Receivables | 220,000 | 300,000 | 300,000 | ||||||||||||
Inventory | 410,000 | 210,000 | 260,000 | ||||||||||||
Land | 600,000 | 130,000 | 110,000 | ||||||||||||
Building and equipment (net) | 600,000 | 270,000 | 330,000 | ||||||||||||
Franchise agreements | 220,000 | 190,000 | 220,000 | ||||||||||||
Accounts payable | (300,000) | (120,000) | (120,000) | ||||||||||||
Accrued expenses | (90,000) | (30,000) | (30,000) | ||||||||||||
Long-term liabilities | (900,000) | (510,000) | (510,000) | ||||||||||||
Common stock$20 par value | (660,000) | ||||||||||||||
Common stock$5 par value | (210,000) | ||||||||||||||
Additional paidin capital | (70,000) | (90,000) | |||||||||||||
Retained earnings, 1/1 | (390,000) | (240,000) | |||||||||||||
Revenues | (960,000) | (330,000) | |||||||||||||
Expenses | 920,000 | 310,000 | |||||||||||||
Note: Parentheses indicate a credit balance.
On December 31, Padre acquires Sols outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs.
Determine the value that would be shown in Padres consolidated financial statements for each of the accounts listed.
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