The following are preliminary financial statements for Choco Co. and Cake Co. for the year ending December 31, 2020 prior to Choco’s acquisition of Cake.

 

 

Choco Co. Cake Co. Book Values Book Values Fair Values 120,000 240,000 120,000 480,000 (70,000) (38,000) (192,000) (96,000) (564,000) (360,000) 240,000 Cash and Receivable 30,000 90,000 108,000 336,000 30,000 94,000 Inventories Land 128,000 348,000 (100,000) (34,000) Building Accounts payable Long-term debt Common stock Additional paid in capital Retained earnings 12/31/20 Revenues (100,000) (32,000) (72,000) (12,000) (348,000) (228,000) 132,000 Expenses On 12/31/2020 Choco exchanged 20,000 shares of its $4 par value common stock for all the outstanding shares of Cake. Choco's stock on that date has a fair value (-market price) of $30 per share. Assume these two companies retained their separate legal identities.