On July 1, 2009, Nexto, Inc. had the following summarized balance sheet with the book values and fair values shown: Accounts Receivable $40,000 $40,000 (net) Inventories 80,000 80,000 Plant and Equipment 160,000 200,000 (net) Land TOTAL ASSETS Accounts Payable Short-term Note Bonds Payable Book Value Fair Value TOTAL LIABILITIES 120,000 160,000 A) B) $400,000 $480,000 $ 20,000 $20,000 30,000 30,000 70,000 70,000 $120,000 $120,000 On that date Pesto, Inc. acquired 100% of Nexto's voting stock from its shareholders by paying the following consideration: a) Cash $200,000 b) Pesto, newly issued, 10,000 shares of stock, $10 par and $15 current market price Pesto paid $25,000 for legal and accounting fees to carry out the combination. What is the total amount of consideration that Pesto should recognize as its cost of acquiring Nexto? $300,000 $325,000 C) $350,000 D) $375,000 E) $360,000
On July 1, 2009, Nexto, Inc. had the following summarized balance sheet with the book values and fair values shown: Accounts Receivable $40,000 $40,000 (net) Inventories 80,000 80,000 Plant and Equipment 160,000 200,000 (net) Land TOTAL ASSETS Accounts Payable Short-term Note Bonds Payable Book Value Fair Value TOTAL LIABILITIES 120,000 160,000 A) B) $400,000 $480,000 $ 20,000 $20,000 30,000 30,000 70,000 70,000 $120,000 $120,000 On that date Pesto, Inc. acquired 100% of Nexto's voting stock from its shareholders by paying the following consideration: a) Cash $200,000 b) Pesto, newly issued, 10,000 shares of stock, $10 par and $15 current market price Pesto paid $25,000 for legal and accounting fees to carry out the combination. What is the total amount of consideration that Pesto should recognize as its cost of acquiring Nexto? $300,000 $325,000 C) $350,000 D) $375,000 E) $360,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
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
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education