Falr Values Falr Values Book Values Beltran Reporting Unit 1/1/17 12/31/18 12/31/18 $ 50,000 225,000 305,000 600,000 480,000 240,000 $ 75,000 193,000 281,000 525,000 500,000 295,000 $ 50,000 225,000 300,000 500,000 450,000 235,000 Cash Receivables Inventory Patents Customer relationships Equipment (net) Goodwill Accounts payable Long-term liabilities 400,000 (121,000) (450,000) (175,000) (400,000) (175,000) (400,000)
Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017. In exchange, Francisco paid $450,000 in cash and issued 104,000 shares of its own $1 par value common stock. On this date, Francisco’s stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran’s assets and liabilities are assigned to a new reporting unit.
The following reports the fair values for the Beltran reporting unit for January 1, 2017, and December 31, 2018, along with their respective book values on December 31, 2018.
a. Prepare Francisco’s
b. On December 31, 2018, Francisco opts to forgo any
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