Plint Corporation exchanged shares of its $2 par common stock for all of Sark Company's assets and liabilities in a planned merger. Immediately prior to the combination, Sark's assets and liabilities were as follows: Page 39 Assets $ 41,000 73,000 144,000 200,000 Cash & Equivalents Accounts Receivable Inventory Land Buildings Equipment Accumulated Depreciation Total Assets 1,520,000 638,000 (431,000) $2,185,000 Liabilities & Equities Accounts Payable $ 35,000 Short-Term Notes Payable 50,000 Bonds Payable 500,000 Common Stock ($10 par) 1,000,000 Additional Paid-In Capital 325,000 Retained Earnings 275,000 Total Liabilities & Equities $2,185,000 Immediately prior to the combination, Plint reported $250,000 additional paid-in capital and $1,350,000 retained earnings. The fair values of Sark's assets and liabilities were equal to their book values on the date of combination except that Sark's buildings were worth $1,500,000 and its equipment was worth $300,000. Costs associated with planning and completing the business combination totaled $38,000, and stock issue costs totaled $22,000. The market value of Plint's stock at the date of combination was $4 per share. Analyze the differential in P1 - 29. To do this, you much answer the following: 1. BV of 100% of net identifiable assets 2. FV of 100% of net identifiable assets 3. FV ot 100% of S Hint: The difference between #1 and #2 above is made up of the difference between BV and FV of Buildings and Equipment