REFERENCE: 02-07

Presented below are the financial balances for the Boxwood Company and the Tranz Company as of December 31, 2017, immediately before Boxwood acquired Tranz. Also included are the fair values for Tranz Company's net assets at that date.

	Boxwood	Tranz Co.	Tranz Co.
	(all amounts in thousands)
	Book Value	Book Value	Fair Value
	12/31/17	12/31/17	12/31/17
Cash	$ 870	$ 240	$ 240
Receivables	660	600	600
Inventory	1,230	420	580
Land	1,800	260	250
Buildings (net)	1,800	540	650
Equipment (net)	660	380	400
Accounts payable	( 570)	( 240)	( 240)
Accrued expenses	( 270)	( 60)	( 60)
Long-term liabilities	(2,700)	(1,020)	(1,120)
Common stock ($20 par)	(1,980)
Common stock ($5 par)		( 420)
Additional paid-in capital	( 210)	( 180)
Retained earnings	(1,170)	( 480)
Revenues	(2,880)	( 660)
Expenses	2,760	620

Note: Parenthesis indicate a credit balance

Assume a business combination took place at December 31, 2017. Boxwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Tranz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Tranzs fair value, Boxwood promises to pay an additional $5.2 (in thousands) to the former owners if Tranzs earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands).

REFER TO: 02-07

11. Compute the investment to be recorded at the date of acquisition.

A) $1,750.

B) $1,755.

C) $1,725.

D) $1,760.

E) $1,765.

REFER TO: 02-07

12. Compute consolidated inventory immediately following the acquisition.

A) $1,650.

B) $1,810.

C) $1,230.

D) $ 580.

E) $1,830.

REFER TO: 02-07

13. Compute consolidated land immediately following the acquisition.

A) $2,060.

B) $1,800.

C) $ 260.

D) $2,050.

E) $2,070.

REFER TO: 02-07

14. Compute consolidated buildings (net) immediately following the acquisition.

A) $2,450.

B) $2,340.

C) $1,800.

D) $ 650.

E) $1,690.

REFER TO: 02-07

15. Compute consolidated goodwill immediately following the acquisition.

A) $440.

B) $442.

C) $450.

D) $455.

E) $452.

REFER TO: 02-07

16. Compute consolidated equipment immediately following the acquisition.

A) $ 400.

B) $ 660.

C) $1,060.

D) $1,040.

E) $1,050.

REFER TO: 02-07

17. Compute consolidated retained earnings as a result of this acquisition.

A) $1,160.

B) $1,170.

C) $1,265.

D) $1,280.

E) $1,650.