Question
Pi Corp. acquired all of the net assets of Rho Corp. on September 30, 2002, in an acquisition reported as a merger. The fair values
Pi Corp. acquired all of the net assets of Rho Corp. on September 30, 2002, in an acquisition reported as a merger. The fair values of Rho Corp.’s identifiable net assets at the date of acquisition are as follows:
Tangible assets | $45,000,000 |
Intangible assets | $85,000,000 |
Liabilities | $65,000,000 |
Pi pays $140 million in cash and issues 3,000,000 shares of stock to the former owners of Rho. Pi’s stock has a par value of $1/share. The market price of the shares at the date of acquisition, $55/share, is used to value the shares issued. Registration fees for the stock are $750,000, and legal and consulting fees connected with the acquisition are $1,100,000, both paid in cash.
Required: Record the acquisition on September 30, 2002.
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