Summary: Dakota acquires 100% of Laramie stock for $37,500,000 in cash and a note payable of $10,000,000 to the Laramie shareholders. In connection with the acquisition, Laramie guarantees and pledges its assets as collateral for the Note Payable issued by Dakota to the former Laramie shareholders. Additional Facts: 1. Both Dakota and Laramie are publicly traded domestic companies and are SEC registrants. 2. Dakota and Laramie have complimentary businesses. 3. Dakota could have purchased the stock or the assets of Laramie (i.e., the form of the transaction was under its control). 4. Dakota is a SPAC. It was capitalized with $40 million dollars in exchange for 40,000 shares of $1 par value stock. 5. Laramie uses the LIFO inventory method. The LIFO reserve @ the date of acquisition is $2,500,000 and the fair value of the inventory approximates FIFO. 6. An appraiser has estimated the fair value of some of Laramie's assets and liabilities as follows: a. Land $1,250,000 b. Buildings $3,475,000 c. Transportation equipment $750,000 d. Computer Equipment $675,000 e. Furniture and Fixtures $55,000 f. Customer (contractual) relationships $6,325,000 g. Trade name $2,325,000 h. Non-compete agreement $1,295,000 i. Long term Debt $5,000,000 7. Dakota incurred the following costs in connection with the acquisition: a. Accounting Fees $325,000 b. Legal Fees $575,000 8. The Fair Value of all other assets and liabilities not identified above may be assumed to be the same as their carrying value on the financial statements @ the date of Acquisition. I Laramie - Balance Sheet $ Date of Acquisition Cash 2,805,500 Accounts Receivable 14,230,000 19,000,000 Inventory Prepaid expenses Total Current Assets 189,500 36,225,000 Land 500,000 2,250,000 900,000 Buildings Equipment Computers Furniture and fixtures Less accumulated depreciation 535,000 150,000 (3,100,000) 8,000,000 Goodwill Other Assets 350,000 Other Intangibles Total Assets 45,810,000 Current Liabilities Total Assets 45,810,000 Current Liabilities Note Payable SHORT-TERM Accounts Payable Accrued Expenses (4,000,000) (10,390,000) 3,710,000) (5,600,000) (23,700,000) Long term Debt Total Liabilities Shareholder Equity Common Stock APIC Retained Earnings Total Shareholder Equity Total Liabilities & Equity (10,000) (13,000,000) (9,100,000) (22,110,000) 45,810,000 Assignment: 1. Compute the purchase price of the acquisition. 2. Prepare a schedule of your Goodwill Talculation 3. APPLY "Push Down" accounting to prepare the adjusted balance sheet for Laramie immediately following the acquisition. a. Present your work in a three-column worksheet as follows: i. First column for the original Laramie balances before the acquisition; ii. Second column for the acquisition adjustments; iii. Third column final adjusted balances following the acquisition. b. THERE SHOULD BE TWO ADJUSTMENTS: i. Adjust balance sheet for fresh start. ii. Record excess purchase price & allocate adjustment to assets and liabilities. 4. Prepare the consolidated worksheet for the combined entity with and without pushdown accounting, Summary: Dakota acquires 100% of Laramie stock for $37,500,000 in cash and a note payable of $10,000,000 to the Laramie shareholders. In connection with the acquisition, Laramie guarantees and pledges its assets as collateral for the Note Payable issued by Dakota to the former Laramie shareholders. Additional Facts: 1. Both Dakota and Laramie are publicly traded domestic companies and are SEC registrants. 2. Dakota and Laramie have complimentary businesses. 3. Dakota could have purchased the stock or the assets of Laramie (i.e., the form of the transaction was under its control). 4. Dakota is a SPAC. It was capitalized with $40 million dollars in exchange for 40,000 shares of $1 par value stock. 5. Laramie uses the LIFO inventory method. The LIFO reserve @ the date of acquisition is $2,500,000 and the fair value of the inventory approximates FIFO. 6. An appraiser has estimated the fair value of some of Laramie's assets and liabilities as follows: a. Land $1,250,000 b. Buildings $3,475,000 c. Transportation equipment $750,000 d. Computer Equipment $675,000 e. Furniture and Fixtures $55,000 f. Customer (contractual) relationships $6,325,000 g. Trade name $2,325,000 h. Non-compete agreement $1,295,000 i. Long term Debt $5,000,000 7. Dakota incurred the following costs in connection with the acquisition: a. Accounting Fees $325,000 b. Legal Fees $575,000 8. The Fair Value of all other assets and liabilities not identified above may be assumed to be the same as their carrying value on the financial statements @ the date of Acquisition. I Laramie - Balance Sheet $ Date of Acquisition Cash 2,805,500 Accounts Receivable 14,230,000 19,000,000 Inventory Prepaid expenses Total Current Assets 189,500 36,225,000 Land 500,000 2,250,000 900,000 Buildings Equipment Computers Furniture and fixtures Less accumulated depreciation 535,000 150,000 (3,100,000) 8,000,000 Goodwill Other Assets 350,000 Other Intangibles Total Assets 45,810,000 Current Liabilities Total Assets 45,810,000 Current Liabilities Note Payable SHORT-TERM Accounts Payable Accrued Expenses (4,000,000) (10,390,000) 3,710,000) (5,600,000) (23,700,000) Long term Debt Total Liabilities Shareholder Equity Common Stock APIC Retained Earnings Total Shareholder Equity Total Liabilities & Equity (10,000) (13,000,000) (9,100,000) (22,110,000) 45,810,000 Assignment: 1. Compute the purchase price of the acquisition. 2. Prepare a schedule of your Goodwill Talculation 3. APPLY "Push Down" accounting to prepare the adjusted balance sheet for Laramie immediately following the acquisition. a. Present your work in a three-column worksheet as follows: i. First column for the original Laramie balances before the acquisition; ii. Second column for the acquisition adjustments; iii. Third column final adjusted balances following the acquisition. b. THERE SHOULD BE TWO ADJUSTMENTS: i. Adjust balance sheet for fresh start. ii. Record excess purchase price & allocate adjustment to assets and liabilities. 4. Prepare the consolidated worksheet for the combined entity with and without pushdown accounting