Price Company issued 8,740 shares of its $20 par value common stock for the net assets of Sims Company in a business combination under which Sims Company will be merged into Price Company. On the date of the combination, Price Company common stock had a fair value of $30 per share. Balance sheets for Price Company and Sims Company immediately prior to the combination were:     Price   Sims Current assets   $460,540   $61,810 Plant and equipment (net)   529,190   140,940 Total   $989,730   $202,750           Liabilities   $274,100   $53,300 Common stock, $20 par value   558,200   88,000 Other contributed capital   72,870   20,750 Retained earnings   84,560   40,700 Total   $989,730   $202,750             (a) If the business combination is treated as a purchase and Sims Company’s net assets have a fair value of $209,574, Price Company’s balance sheet immediately after the combination will include goodwill of     $54,226.   $52,626.   $51,626.   $60,226.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Price Company issued 8,740 shares of its $20 par value common stock for the net assets of Sims Company in a business combination under which Sims Company will be merged into Price Company. On the date of the combination, Price Company common stock had a fair value of $30 per share. Balance sheets for Price Company and Sims Company immediately prior to the combination were:

    Price   Sims
Current assets   $460,540   $61,810
Plant and equipment (net)   529,190   140,940
Total   $989,730   $202,750
         
Liabilities   $274,100   $53,300
Common stock, $20 par value   558,200   88,000
Other contributed capital   72,870   20,750
Retained earnings   84,560   40,700
Total   $989,730   $202,750
 
 
 
 
 
 

(a)

If the business combination is treated as a purchase and Sims Company’s net assets have a fair value of $209,574, Price Company’s balance sheet immediately after the combination will include goodwill of


 

 

$54,226.

 

$52,626.

 

$51,626.

 

$60,226.
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