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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please don't give image format
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
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.
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