Question
The following financial statement information is for an investor company and an investee company on January 1, 2020. On January 1, 2020, the investor companys
The following financial statement information is for an investor company and an investee company on January 1, 2020. On January 1, 2020, the investor companys common stock had a traded market value of $36 per share, and the investee companys common stock had a traded market value of $28 per share.
Book Values | Fair Values | ||||
Investor | Investee | Investor | Investee | ||
Receivables & inventories | 90,000 | 55,000 | 121,000 | 35,000 | |
Land | 210,000 | 125,000 | 321,000 | 150,000 | |
Property & equipment | 305,000 | 101,000 | 297,000 | 85,000 | |
Trademarks & patents | - | - | 160,000 | 82,000 | |
Total assets | 605,000 | 281,000 | 899,000 | 352,000 | |
Liabilities | 156,000 | 82,000 | 170,000 | 98,000 | |
Common stock ($1 par) | 27,000 | 11,000 | |||
Additional paid-in capital | 331,000 | 173,000 | |||
Retained earnings | 91,000 | 15,000 | |||
Total liabilities & equity | 605,000 | 281,000 | |||
Net assets | 449,000 | 199,000 | 729,000 | 254,000 |
Assume that the investor company issued 9,800 new shares of the investor companys common stock in exchange for all of the investee companys common stock. The financial information presented, above, was prepared immediately before this transaction. Provide the Investor Companys balances (i.e., on the investors books, before consolidation) for Goodwill immediately following the acquisition of the investees net assets:
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started