quisition Method

To acquire the net assets of Soto Company, Pilar Corporation issued 2 shares of its $1 par value common stock for every share of SotoCompany’s common stock that was outstanding. On the date of the acquisition, Soto had 20,000 shares outstanding and the fair value of Pilar’s common stock was $10 per share. With respect to the merger, Pilar incurred $5,000 of consulting costs (direct expense) and stock issue costs of $2,000. Pilar recorded the transaction under the acquisition method. Soto’s balance sheet prior to the transaction was as follows:

Book ValueFair Value

Cash $ 100,000$100,000

Inventory 60,000 70,000

Equipment 15,000 15,000

Building 190,000 205,000

Land 80,000 90,000

Total Assets $ 445,000$480,000

Accounts Payable $ 110,000$120,000 

Common Stock ($5 par)  100,000 100,000

Other Contributed Capital  120,000 120,000

 Retained Earnings 115,000 140,000

 Total Liab & Equity $ 445,000$480,000

Prepare the journal entry on the books of Pilar to record the purchase of Soto’s net assets