1,900,000 Plant Assets 1,100,000 1,200,000 Current Liabilities (1,000,000) (1,000,00
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On 1/1/21 Pinn Corporation acquired all of Simm Corporation’s common stock by issuing #250,000 shares of $1 par value common stock with a current market value of $10,000,000. Related legal fees were $300,000 and were paid in cash. The book value and fair values of Simm’s accounts are given below:
|
|
Book Value DR (CR) |
Fair Value DR (CR) |
|
Current Assets |
1,900,000 |
1,900,000 |
|
Plant Assets |
1,100,000 |
1,200,000 |
|
Current Liabilities |
(1,000,000) |
(1,000,000) |
|
Long Term Liabilities |
(500,000) |
(475,000) |
|
Common Stock |
(800,000) |
|
|
|
(700,000) |
|
In addition, Simm has a previously unrecorded identifiable Intangible Asset with a fair value of $500,000.
Required:
- Prepare the entry on Pinn’s books to record the acquisition
- Prepare the working paper eliminating entries to consolidate the
balance sheets of Pinn Corporation and Simm Corporation at the date of acquisition.
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