Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,500 shares of its $15 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $59, and Staple $10 par value shares are trading at $23 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows: Palm Corporation Staple Company Balance Sheet Item Book Value Fair Value Book Value Fair Value Assets Cash & Receivables $ 151,000 $ 151,000 $ 46,000 $ 46,000 Land 110,000 190,000 57,000 83,000 Buildings & Equipment (net) 313,000 411,000 176,000 230,000 Total Assets $ 574,000 $ 752,000 $ 279,000 $ 359,000 Equities Common Stock $ 200,000 $ 81,000 Additional Paid-In Capital 18,000 9,900 Retained Earnings 356,000 188,100 Total Equities $ 574,000 $ 279,000 Required: What amount will be reported immediately following the business combination for each of the following items in the combined company’s balance sheet? a.Common Stock b.Cash and Receivables c.Land d.Buildings and Equipment (net) e.Goodwill f.Additional paid-In Capital g.Retained Earnings
Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,500 shares of its $15 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $59, and Staple $10 par value shares are trading at $23 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows: Palm Corporation Staple Company Balance Sheet Item Book Value Fair Value Book Value Fair Value Assets Cash & Receivables $ 151,000 $ 151,000 $ 46,000 $ 46,000 Land 110,000 190,000 57,000 83,000 Buildings & Equipment (net) 313,000 411,000 176,000 230,000 Total Assets $ 574,000 $ 752,000 $ 279,000 $ 359,000 Equities Common Stock $ 200,000 $ 81,000 Additional Paid-In Capital 18,000 9,900 Retained Earnings 356,000 188,100 Total Equities $ 574,000 $ 279,000 Required: What amount will be reported immediately following the business combination for each of the following items in the combined company’s balance sheet? a.Common Stock b.Cash and Receivables c.Land d.Buildings and Equipment (net) e.Goodwill f.Additional paid-In Capital g.Retained Earnings
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,500 shares of its $15 par value common stock to acquire all of Staple Company’s assets. Palm shares currently are trading at $59, and Staple $10 par value shares are trading at $23 each. Historical cost and fair value
| Palm Corporation | Staple Company | |||||||||||||
| Balance Sheet Item | Book Value | Fair Value | Book Value | Fair Value | ||||||||||
| Assets | ||||||||||||||
| Cash & Receivables | $ | 151,000 | $ | 151,000 | $ | 46,000 | $ | 46,000 | ||||||
| Land | 110,000 | 190,000 | 57,000 | 83,000 | ||||||||||
| Buildings & Equipment (net) | 313,000 | 411,000 | 176,000 | 230,000 | ||||||||||
| Total Assets | $ | 574,000 | $ | 752,000 | $ | 279,000 | $ | 359,000 | ||||||
| Equities | ||||||||||||||
| Common Stock | $ | 200,000 | $ | 81,000 | ||||||||||
| Additional Paid-In Capital | 18,000 | 9,900 | ||||||||||||
| 356,000 | 188,100 | |||||||||||||
| Total Equities | $ | 574,000 | $ | 279,000 | ||||||||||
Required:
What amount will be reported immediately following the business combination for each of the following items in the combined company’s balance sheet?
a.Common Stock
b.Cash and Receivables
c.Land
d.Buildings and Equipment (net)
e.Goodwill
f.Additional paid-In Capital
g.Retained Earnings
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