Question
Mu Corp. acquired all of the net assets of Nu Corp. on February 28, 2016, in an acquisition reported as a merger. The fair values
Mu Corp. acquired all of the net assets of Nu Corp. on February 28, 2016, in an acquisition reported as a merger. The fair values of Nu Corp.’s identifiable net assets at the date of acquisition are as follows:
Tangible assets | $50,000,000 |
Intangible assets | $95,000,000 |
Liabilities | $70,000,000 |
Mu pays $160 million in cash and issues 2,000,000 shares of stock to the former owners of Nu. Mu’s stock has a par value of $1/share. The market price of the shares at the date of acquisition, $65/share, is used to value the shares issued. Registration fees for the stock are $900,000, and legal and consulting fees connected with the acquisition are $1,300,000, both paid in cash.
Required: Record the acquisition on February 28, 2016.
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