On May 1, Donovan Company reported the following account balances: Current assets $ 134,000 Buildings & equipment (net) 232,000 Total assets $ 366,000 Liabilities $ 110,500 Common stock 150,000 Retained earnings 105,500 Total liabilities and equities $ 366,000 On May 1, Beasley paid $425,800 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $16,900 in accounts payable for legal and accounting fees. Beasley also agreed to pay $79,900 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $24,600. In determining its offer, Beasley noted the following: Donovan holds a building with a fair value $34,400 more than its book value. Donovan has developed unpatented technology appraised at $28,800, although is it not recorded in its financial records. Donovan has a research and development activity in process with an appraised fair value of $51,300. The project has not yet reached technological feasibility. Book values for Donovan’s current assets and liabilities approximate fair values. How much should Beasley record as total assets acquired in the Donovan merger? Multiple Choice $425,800. $560,900. $496,100. $450,400.
On May 1, Donovan Company reported the following account balances: Current assets $ 134,000 Buildings & equipment (net) 232,000 Total assets $ 366,000 Liabilities $ 110,500 Common stock 150,000 Retained earnings 105,500 Total liabilities and equities $ 366,000 On May 1, Beasley paid $425,800 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $16,900 in accounts payable for legal and accounting fees. Beasley also agreed to pay $79,900 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $24,600. In determining its offer, Beasley noted the following: Donovan holds a building with a fair value $34,400 more than its book value. Donovan has developed unpatented technology appraised at $28,800, although is it not recorded in its financial records. Donovan has a research and development activity in process with an appraised fair value of $51,300. The project has not yet reached technological feasibility. Book values for Donovan’s current assets and liabilities approximate fair values. How much should Beasley record as total assets acquired in the Donovan merger? Multiple Choice $425,800. $560,900. $496,100. $450,400.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Required information
Skip to question
[The following information applies to the questions displayed below.]
On May 1, Donovan Company reported the following account balances:
| Current assets | $ | 134,000 | |
| Buildings & equipment (net) | 232,000 | ||
| Total assets | $ | 366,000 | |
| Liabilities | $ | 110,500 | |
| Common stock | 150,000 | ||
| 105,500 | |||
| Total liabilities and equities | $ | 366,000 | |
On May 1, Beasley paid $425,800 in stock (fair value) for all of the assets and liabilities of Donovan, which will cease to exist as a separate entity. In connection with the merger, Beasley incurred $16,900 in accounts payable for legal and accounting fees.
Beasley also agreed to pay $79,900 to the former owners of Donovan contingent on meeting certain revenue goals during the following year. Beasley estimated the present value of its probability adjusted expected payment for the contingency at $24,600. In determining its offer, Beasley noted the following:
- Donovan holds a building with a fair value $34,400 more than its book value.
- Donovan has developed unpatented technology appraised at $28,800, although is it not recorded in its financial records.
- Donovan has a research and development activity in process with an appraised fair value of $51,300. The project has not yet reached technological feasibility.
- Book values for Donovan’s current assets and liabilities approximate fair values.
How much should Beasley record as total assets acquired in the Donovan merger?
Multiple Choice
-
$425,800.
-
$560,900.
-
$496,100.
-
$450,400.
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 2 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