On January 1, 2021, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Moody Osorio Cash $ 180 $ 40 Receivables 810 180 Inventories 1,080 280 Land 600 360 Buildings (net) 1,260 440 Equipment (net) 480 100 Accounts payable (450 ) (80 ) Long-term liabilities (1,290 ) (400 ) Common stock ($1 par) (330 ) Common stock ($20 par) (240 ) Additional paid-in capital (1,080 ) (340 ) Retained earnings (1,260 ) (340 ) Note: Parentheses indicate a credit balance. In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of consolidated common stock at date of acquisition.
On January 1, 2021, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows:
Moody | Osorio | ||||||
Cash | $ | 180 | $ | 40 | |||
Receivables | 810 | 180 | |||||
Inventories | 1,080 | 280 | |||||
Land | 600 | 360 | |||||
Buildings (net) | 1,260 | 440 | |||||
Equipment (net) | 480 | 100 | |||||
Accounts payable | (450 | ) | (80 | ) | |||
Long-term liabilities | (1,290 | ) | (400 | ) | |||
Common stock ($1 par) | (330 | ) | |||||
Common stock ($20 par) | (240 | ) | |||||
Additional paid-in capital | (1,080 | ) | (340 | ) | |||
(1,260 | ) | (340 | ) | ||||
Note: Parentheses indicate a credit balance.
In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the
Compute the amount of consolidated common stock at date of acquisition.
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