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PR Company pays $10,000 in cash and issues no-par stock with a fair value of $40,000 to acquire all of SX Corporations net assets. SXs
PR Company pays $10,000 in cash and issues no-par stock with a fair value of $40,000 to acquire all of SX Corporations net assets. SXs balance sheet at the date of acquisition is as follows:
SX Corporation | ||
---|---|---|
Book value | Fair value | |
Current assets | $ 2,000 | $ 4,200 |
Property, plant & equipment, net | 10,000 | 6,000 |
Identifiable intangible assets | 4,000 | 14,000 |
Total assets | $16,000 | |
Current liabilities | $ 1,600 | $ 2,000 |
Long-term debt | 12,000 | 11,600 |
Capital stock | 5,000 | |
Retained earnings | 8,000 | |
Accumulated other comprehensive income | (1,000) | |
Treasury stock | (9,600) | |
Total liabilities & equity | $16,000 |
PRs consultants find these items that are not reported on SXs balance sheet:
Fair value | |
---|---|
Potential contracts with new customers | $ 8,000 |
Advanced production technology | 4,000 |
Future cost savings | 2,000 |
Customer lists | 1,000 |
Outside consultants are paid $200 in cash, and registration fees to issue PRs new stock are $400. The question below relates to the entry or entries PR makes to record the acquisition on its books.
PR credits capital stock in the amount of
$40,000
$50,000
$39,600
$39,200
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