Peak issues 66,750 new shares of its common stock valued at $5 per share for all of the outstanding stock of Scene. Peak alsoincurred attorney costs of $12,600 related to the combination. Prior to these transactions, Peak, Incorporated, and Scene Corporationhad the following stockholders' equity figures:ItemsPeakScene$Common stock ($1 par value)$ 200,000123,000Additional paid-in capitalRetained earnings100,000301,00059,000167,250Immediately following the business combination, what totals would appear on a consolidated balance sheet for Additional Paid-InCapital and Retained Earnings, respectively?

Step 1: Consolidated balance of Additional Paid-In Capital The consolidated balance of Additional…

Answered: Peak issues 66,750 new shares of its…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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On 1/1/21 Pinn Corporation acquired all of Simm Corporation’s common stock by issuing #250,000 shares of $1 par value common stock with a current market value of $10,000,000. Related legal fees were $300,000 and were paid in cash. The book value and fair values of Simm’s accounts are given below: Book Value DR (CR) Fair Value DR (CR) Current Assets 1,900,000 1,900,000 Plant Assets 1,100,000 1,200,000 Current Liabilities (1,000,000) (1,000,000) Long Term Liabilities (500,000) (475,000) Common Stock (800,000) Retained Earnings (700,000) In addition, Simm has a previously unrecorded identifiable Intangible Asset with a fair value of $500,000. Required: Prepare the entry on Pinn’s books to record the acquisition Prepare the working paper eliminating entries to consolidate the balance sheets of Pinn Corporation and Simm Corporation at the date of acquisition.

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