Wilkins Inc. acquired 100% of the voting common stock of Granger Inc. on January 1, 2021. The
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Question:
Wilkins Inc. acquired 100% of the voting common stock of Granger Inc. on January 1, 2021. The book value and fair value of Grangers accounts on that date (prior to creating the combination) are as follows, along with the book value of Wilkinss accounts:
Wilkins Book Value | Granger Book Value | Granger Fair Value | ||||
Retained earnings, 1/1/21 | $ | 250,000 | $ | 240,000 | ||
Cash and receivables | 170,000 | 70,000 | $ | 70,000 | ||
Inventory | 230,000 | 180,000 | 210,000 | |||
Land | 320,000 | 220,000 | 240,000 | |||
Buildings (net) | 480,000 | 240,000 | 280,000 | |||
Equipment (net) | 120,000 | 90,000 | 90,000 | |||
Liabilities | 650,000 | 440,000 | 430,000 | |||
Common stock | 360,000 | 80,000 | ||||
Additional paid-in capital | 60,000 | 40,000 | ||||
Assume that Wilkins issued 13,000 shares of common stock with a $5 par value and a $46 fair value for all of the outstanding shares of Granger. What will be the consolidated Additional Paid-In Capital and Retained Earnings (January 1, 2021 balances) as a result of this acquisition transaction?
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