Bar Corporation has been looking to expand its operations and has decided to acquire the assets of Vicker Company and Kendal Company. Bar will issue 30,000 shares of its $10 par common stock to acquire the net assets of Vicker Company and will issue 15,000 shares to acquire the net assets of Kendal Company.Vicker and Kendal have the following balance sheets as of December 31, 2015:Assets Vicker KendalAccounts receivable . . . . . . . . . . . . . . . . . $ 200,000 $ 80,000Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 85,000Property, plant, and equipment:Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 50,000Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000 300,000Accumulated depreciation. . . . . . . . .. . . (150,000) (110,000)Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 850,000 $ 405,000Liabilities and Equity Vicker KendalCurrent liabilities . . . . . . . . . . . . . . . . . . . . . $160,000 $ 55,000Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . 100,000 100,000Stockholders’ equity:Common stock ($10 par). . . . . . . . . . . . . . 300,000 100,000Retained earnings . . . . . . . . . . . . . . . . . . . . 290,000 150,000Total liabilities and equity . . . .. . . . . . . . . $850,000 $405,000 The following fair values are agreed upon by the firms:Assets Vicker KendalInventory . . . . . . . . . . . . . . . . . . . . . . . . . $190,000 $100,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 80,000Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 400,000Bonds payable . . . . . . . . . . . . . . . . . . . . . . 90,000 95,000Bar’s stock is currently trading at $40 per share. Bar will incur $5,000 of acquisition costs in acquiring Vicker and $4,000 of acquisition costs in acquiring Kendal. Bar will also incur $15,000 of registration and issuance costs for the shares issued in both acquisitions. Bar’s stockholders’ equity is as follows:Common stock ($10 par). . . . . . . . . . . . . . . . . . . . . . . . $1,200,000Paid-in capital in excess of par . . . . . . . . . . . . . . . . . . . 800,000Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000Record the acquisitions on the books of Bar Corporation. Value analysis is suggested to guide your work.
Bar Corporation has been looking to expand its operations and has decided to acquire the assets of Vicker Company and Kendal Company. Bar will issue 30,000 shares of its $10 par common stock to acquire the net assets of Vicker Company and will issue 15,000 shares to acquire the net assets of Kendal Company.
Vicker and Kendal have the following
Assets Vicker Kendal
Accounts receivable . . . . . . . . . . . . . . . . . $ 200,000 $ 80,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 85,000
Property, plant, and equipment:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 50,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000 300,000
Accumulated
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 850,000 $ 405,000
Liabilities and Equity Vicker Kendal
Current liabilities . . . . . . . . . . . . . . . . . . . . . $160,000 $ 55,000
Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . 100,000 100,000
Common stock ($10 par). . . . . . . . . . . . . . 300,000 100,000
Retained earnings . . . . . . . . . . . . . . . . . . . . 290,000 150,000
Total liabilities and equity . . . .. . . . . . . . . $850,000 $405,000
The following fair values are agreed upon by the firms:
Assets Vicker Kendal
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . $190,000 $100,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 80,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000 400,000
Bonds payable . . . . . . . . . . . . . . . . . . . . . . 90,000 95,000
Bar’s stock is currently trading at $40 per share. Bar will incur $5,000 of acquisition costs in acquiring Vicker and $4,000 of acquisition costs in acquiring Kendal. Bar will also incur $15,000 of registration and issuance costs for the shares issued in both acquisitions. Bar’s stockholders’ equity is as follows:
Common stock ($10 par). . . . . . . . . . . . . . . . . . . . . . . . $1,200,000
Paid-in capital in excess of par . . . . . . . . . . . . . . . . . . . 800,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000
Record the acquisitions on the books of Bar Corporation. Value analysis is suggested to guide your work.
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