Homework Help is Here – Start Your Trial Now!
Business
Accounting
On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.

On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Please don't give image format
Account Titles and Explanation (To record assets and liabilities acquired) (To record the direct acquisition costs) (To record the stock issue costs) Debit Credit
Transcribed Image Text:Account Titles and Explanation (To record assets and liabilities acquired) (To record the direct acquisition costs) (To record the stock issue costs) Debit Credit
Condensed balance sheets for Ayayai Company and Blossom Company on January 1, 2023, are as follows: Current assets Plant and equipment (net) Total assets Total liabilities Common stock, $10 par value Other contributed capital Retained earnings (deficit) Total liabilities and equities Ayayai $198,000 495,000 $693,000 $104,500 385,000 137,500 66,000 $693,000 Blossom $93,500 154,000 $247,500 $38,500 176,000 58,300 (25,300) $247,500 On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.
Transcribed Image Text:Condensed balance sheets for Ayayai Company and Blossom Company on January 1, 2023, are as follows: Current assets Plant and equipment (net) Total assets Total liabilities Common stock, $10 par value Other contributed capital Retained earnings (deficit) Total liabilities and equities Ayayai $198,000 495,000 $693,000 $104,500 385,000 137,500 66,000 $693,000 Blossom $93,500 154,000 $247,500 $38,500 176,000 58,300 (25,300) $247,500 On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Liquidation of Companies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS