Question
Richland Company acquires Seameyer, Inc., by issuing 20,000 shares of $1 par common stock with a market price of $25 per share on the acquisition
Richland Company acquires Seameyer, Inc., by issuing 20,000 shares of $1 par common stock with a market price of $25 per share on the acquisition date and paying $100,000 cash. The assets and liabilities on Seameyer's balance sheet were valued at fair values except equipment that was undervalued by $175,000. There was also an unrecorded patent valued at $32,500, as well as an unrecorded trademark valued at $80,000. In addition, the agreement provided for additional consideration, valued at $60,000, if certain earnings targets were met.
The pre-acquisition balance sheets for the two companies at acquisition date are presented below.
Richland | Seameyer | |
Cash | $130,550 | $17,300 |
Accounts receivable | 64,000 | 116,000 |
Inventory | 97,000 | 149,000 |
Property, plant, and equipment | 1,611,050 | 179,350 |
$1,902,600 | $461,650 | |
Accounts payable | $31,350 | $21,150 |
Salaries and taxes payable | 24,530 | 36,800 |
Notes payable | 550,000 | 100,000 |
Common stock | 110,000 | 30,000 |
Additional paid-in capital | 850,000 | 37,500 |
Retained earnings | 336,720 | 236,200 |
$1,902,600 | $461,650 |
1.Compute the consolidated balance in Cash.
2. Compute consolidated common stock.
3. Compute consolidated additional paid-in capital.
4.What amount of goodwill was recorded in the acquisition?
Please solve all four parts
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