Exercise A2-1: Review of Asset Acquisition Accounting and Different Forms of Business Combinations The following is January 1, 2013 balance-sheet information (including relevant fair value data) for Pops Corp. and Son, Inc.: Book Values Pops Son 500 1,600 500 4,800 1,500 1,725 $8,625 $2,625 Current Assets Equipment Building Intangible Assets Total Assets Fair Values Pops Son 500 2,500 5,260 1,800 1,800 750 $10,060 $3,150 600 625 2,000 2,060 650 Liabilities Common Stock ($2 par) Additional Paid-in Capital Retained Earnings Total Liabilities and Equities 2,000 1,000 3,625 $8,625 625 1,000 250 750 $2,625 Additional Information: Fair value amounts for individually identifiable tangible and intangible assets are measured pursuant to FASB Accounting Standards Codification (ASC) 805 and ASC 820. Assume both companies are publicly traded. In January 1, 2013, Pops' stock price is $9.00/share and Son's stock price is $5.20 per share. Each of the following questions is independent of the others. Exercise A2-1 (continued) 1. On January 1, 2013, Pops Corp. issues 300 shares of its common stock to Son, Inc. in exchange for all of Son's assets and liabilities. Assume that Son does not qualify as a business pursuant to the definition in FASB ASC 805. Record the transaction on the books of Pops. 2. On January 1, 2013, Pops Corp. issues 300 shares of its common stock to Son, Inc. in exchange for all of Son's assets and liabilities. Assume that Son does qualify as a business pursuant to the definition in FASB ASC 805. Record the transaction on the books of Pops. Exercise A2-1 (continued) 3. On January 1, 2013, Pops Corp. issues 300 shares of its common stock to the shareholders of Son, Inc. in exchange for all of the shares of Son common stock. Assume that Son does qualify as a business pursuant to the definition in FASB ASC 805. Record the transaction on the books of Pops. Exercise A2-1: Review of Asset Acquisition Accounting and Different Forms of Business Combinations The following is January 1, 2013 balance-sheet information (including relevant fair value data) for Pops Corp. and Son, Inc.: Book Values Pops Son 500 1,600 500 4,800 1,500 1,725 $8,625 $2,625 Current Assets Equipment Building Intangible Assets Total Assets Fair Values Pops Son 500 2,500 5,260 1,800 1,800 750 $10,060 $3,150 600 625 2,000 2,060 650 Liabilities Common Stock ($2 par) Additional Paid-in Capital Retained Earnings Total Liabilities and Equities 2,000 1,000 3,625 $8,625 625 1,000 250 750 $2,625 Additional Information: Fair value amounts for individually identifiable tangible and intangible assets are measured pursuant to FASB Accounting Standards Codification (ASC) 805 and ASC 820. Assume both companies are publicly traded. In January 1, 2013, Pops' stock price is $9.00/share and Son's stock price is $5.20 per share. Each of the following questions is independent of the others. Exercise A2-1 (continued) 1. On January 1, 2013, Pops Corp. issues 300 shares of its common stock to Son, Inc. in exchange for all of Son's assets and liabilities. Assume that Son does not qualify as a business pursuant to the definition in FASB ASC 805. Record the transaction on the books of Pops. 2. On January 1, 2013, Pops Corp. issues 300 shares of its common stock to Son, Inc. in exchange for all of Son's assets and liabilities. Assume that Son does qualify as a business pursuant to the definition in FASB ASC 805. Record the transaction on the books of Pops. Exercise A2-1 (continued) 3. On January 1, 2013, Pops Corp. issues 300 shares of its common stock to the shareholders of Son, Inc. in exchange for all of the shares of Son common stock. Assume that Son does qualify as a business pursuant to the definition in FASB ASC 805. Record the transaction on the books of Pops
