On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corporation Stork Corporation Combined Entity Book Value Book Value Assets Cash $ 52,000 $ 22,000 $ 74,000 Accounts Receivable 72,000 42,000 112,000 Inventory 62,000 47,000 120,000 Buildings and Equipment (net) 312,000 122,000 454,000 Goodwill ? Total Assets $ 498,000 $ 233,000 $ ? Liabilities and Equities Accounts Payable $ 44,000 $ 26,000 $ 70,000 Bonds Payable 162,000 82,000 244,000 Bond Premium 6,000 6,000 Common Stock, $5 par 112,000 52,000 139,500 Additional Paid-In Capital 77,000 40,000 335,500 Retained Earnings 97,000 33,000 ? Total Liabilities and Equities $ 498,000 $ 233,000 $ ? Required: What number of shares did Plend issue to acquire Stork’s assets and liabilities? What was the total market value of the shares issued by Plend? What was the fair value of the inventory held by Stork at the date of combinatio
On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corporation Stork Corporation Combined Entity Book Value Book Value Assets Cash $ 52,000 $ 22,000 $ 74,000 Accounts Receivable 72,000 42,000 112,000 Inventory 62,000 47,000 120,000 Buildings and Equipment (net) 312,000 122,000 454,000 Goodwill ? Total Assets $ 498,000 $ 233,000 $ ? Liabilities and Equities Accounts Payable $ 44,000 $ 26,000 $ 70,000 Bonds Payable 162,000 82,000 244,000 Bond Premium 6,000 6,000 Common Stock, $5 par 112,000 52,000 139,500 Additional Paid-In Capital 77,000 40,000 335,500 Retained Earnings 97,000 33,000 ? Total Liabilities and Equities $ 498,000 $ 233,000 $ ? Required: What number of shares did Plend issue to acquire Stork’s assets and liabilities? What was the total market value of the shares issued by Plend? What was the fair value of the inventory held by Stork at the date of combinatio
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial
| Plend Corporation | Stork Corporation | Combined Entity | |
|---|---|---|---|
| Book Value | Book Value | ||
| Assets | |||
| Cash | $ 52,000 | $ 22,000 | $ 74,000 |
| 72,000 | 42,000 | 112,000 | |
| Inventory | 62,000 | 47,000 | 120,000 |
| Buildings and Equipment (net) | 312,000 | 122,000 | 454,000 |
| ? | |||
| Total Assets | $ 498,000 | $ 233,000 | $ ? |
| Liabilities and Equities | |||
| Accounts Payable | $ 44,000 | $ 26,000 | $ 70,000 |
| Bonds Payable | 162,000 | 82,000 | 244,000 |
| Bond Premium | 6,000 | 6,000 | |
| Common Stock, $5 par | 112,000 | 52,000 | 139,500 |
| Additional Paid-In Capital | 77,000 | 40,000 | 335,500 |
| 97,000 | 33,000 | ? | |
| Total Liabilities and Equities | $ 498,000 | $ 233,000 | $ ? |
Required:
- What number of shares did Plend issue to acquire Stork’s assets and liabilities?
- What was the total market value of the shares issued by Plend?
- What was the fair value of the inventory held by Stork at the date of combination?
- What was the fair value of the identifiable net assets held by Stork at the date of combination?
- What amount of goodwill, if any, will be reported by the combined entity immediately following the combination?
- What balance in retained earnings will the combined entity report immediately following the combination?
- If the
depreciable assets held by Stork had an average remaining life of 10 years at the date of acquisition, what amount of depreciation expense will be reported on those assets in 20X2?
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