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On June 30, 200x Carl Corporation purchased Lin Company by issuing 50,000 shares of stock. Stock has a market value of $15.00 per share. This acquisition is to be recorded as a statutory merger through asset acquisition. In this type of business combination Carl company acquires all the assets and liabilities of Lin Company. Lin Company is dissolved and goes out of business. Prepare the entries the purchase and combination on June 30, 200x Following information is shown prior to the merger activity being recorded: Carl Company Assets Liabilities and Capital Cash $ 80,000 Current Liabilities $ 80,000 Inventories 80,000 Plant 300,000 Common Stock $5PV 10,000 Land 20.000 Additional Paid in Capital 190,000 Retained Earnings 200,000 Total $480,000 Total $480,000 Lin Company Assets Liabilities and Capital Cash Accounts Receivable Plant Assets Retained Earnings Total $200,000 20,000 530,000 100,000 $750,000 Current Liabilities Common Stock $10PV Additional Paid in Capital Total $100,000 150,000 400,000 $750,000 Other information: Other information: The Lin Company Plant Assets fair market value is $600,000 The out of pocket costs of the merger are: SEC Registration Statement fee Legal fees for the SEC Registration Statement Accounting fees for the SEC Registration Statement Finders Fee Legal fees for the merger Accounting fees for the merger $20,000 $15,000 $ 5,000 $ 6,000 $ 2,000 $ 4,000 1. Prepare and post the entries to record this as a statutory merger. In a statutory merger permanent dissolution of the subsidiary occurs at the combination date. 2. Prepare an after merger balance sheet. SEC Registration Fee SEC Registration legal fees Finder's fee Merger legal fees Merger accounting fees 20,000 stock issue 20,000 stock issue 6.000 merger 2,000 merger 4,000 merger Corporation General L Liabilities 52.000 Cash 80,000 Plant 300,000 80,000 Merger Expense Cash Accounts Receivable Capital Stoch Paid in Capital Cash Land 20,000 10,000 Investment in Lin Company Common Stock Paid in Capital Inventory 80,000 Investment in Lin Co aid in Capita 190,000 0 Cash Accounts receivable Plant Goodwill ferger Expens etained Earning B D E G 1 J o P o Common Stock Paid in Capital H Inventory 80,000 K L MN Investment in Lin Co aid in Capita 190,000 0 Goodwill Terger Expens Cash Accounts receivable Plant Goodwill Liabilities Investment in Lin Co etained Earning 200,000 Computation of Goodwill Fair Value of Consideration transferred Book value of Lin Co Excess fair value over book Allocated to plant Goodwill 30,000 bilities 80,000 Liabilities and Equity Liabilities Corporatio Balance Sheet Assets Cash Accts. Rec Inventory Plant Land Goodwill Total Capital Stock Paid in capital Retained earnings al Stoch 10.000 Total n Capita 190.000 SEC Registration Fee SEC Registration legal foes Finder's fee Merger legales Merger accounting fees 20,000 stock issue 20,000 stock issue 5.000 merger 2.000 merger 4.000 merge 52.000 Corporation General 5 3 B Corp alance Sheet Cash 80,000 Plant 300,000 Labios 80,000 Cash Acct Rex Labiendo Libilities 0 11 12 13 Merger Expense Cash Plant Land Goodil Total Capital Stock Padin capital Reland caring Accounts Receivable Land 20.000 Capital Stock Total Padin Capital Cash 10,000 Investment in Lin Company Common Stock Padin Capital 30.000 Investment in Lin Caladin Capita 190,000 0 15 16 17 18 19 20 21 22 23 24 25 26 27 20 20 30 31 32 33 Casti Accounts receivable Plant Good Goodwill Berger Expens and EM 200.000 Investment in in Co Computation of Goodwi Fair Value of Consideration transferred Book Value of Lin Co
