Asset versus stock acquisition. Barstow Company is contemplating the acquisition of the net assets of Crown Company for $875,000 cash. To complete the transaction, acquisition costs are $15,000. The balance sheet of Crown Company on the purchase date is as follows: Crown Company Balance Sheet December 31, 2015 Assets Liabilities and Equity Current assets . . . . . . . . . . . . . . . . . . . . . $ 80,000 Liabilities . . . . . . . . . . . . . . . . $100,000 Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 Common stock ($10 par). . . . 100,000 Building . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 Paid-in capital in excess of par 150,000 Accumulated depreciation—building . . . (200,000) Retained earnings . . . . . . . . . 250,000 Equipment . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Accumulated depreciation—equipment . (100,000) Total assets. . . . . . . . . . . . . . . . . . . . . . $ 600,000 Total liabilities and equity . $600,000 The following fair values have been obtained for Crown’s identifiable assets and liabilities: Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,000 Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,000 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000 1. Record the acquisition of the net assets of Crown Company on Barstow Company’s books. 2. Record the sale of the net assets on the books of Crown Company. 3. Record the acquisition of 100% of the common stock of Crown Company on Barstow’s books. Crown Company will remain a separate legal entity (Please use a MS Excel shfreadsheet and show working)
Asset versus stock acquisition. Barstow Company is contemplating the acquisition of the net assets of Crown Company for $875,000 cash. To complete the
transaction, acquisition costs are $15,000. The
Crown Company
Balance Sheet
December 31, 2015
Assets Liabilities and Equity
Current assets . . . . . . . . . . . . . . . . . . . . . $ 80,000 Liabilities . . . . . . . . . . . . . . . . $100,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 Common stock ($10 par). . . . 100,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 Paid-in capital in excess of par 150,000
Accumulated
Equipment . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Accumulated depreciation—equipment . (100,000)
Total assets. . . . . . . . . . . . . . . . . . . . . . $ 600,000 Total liabilities and equity . $600,000
The following fair values have been obtained for Crown’s identifiable assets and liabilities:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 85,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,000
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000
1. Record the acquisition of the net assets of Crown Company on Barstow Company’s books.
2. Record the sale of the net assets on the books of Crown Company.
3. Record the acquisition of 100% of the common stock of Crown Company on Barstow’s
books. Crown Company will remain a separate legal entity
(Please use a MS Excel shfreadsheet and show working)
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