Q1. How much is the consideration transferred? Q2. What is the consolidated balance for Land? Q3. What is the consolidated balance for Accounts payable?
- On 12/31, Choco acquired all assets and liabilities of Cake by issuing 40,000 shares of its common stock when the market value (=fair value) is $32/share and this combination is a statutory merger (Cake was dissolved). Choco has common stock with $15 par, 50,000 shares outstanding and Cake has $5 par, 60,000 shares outstanding
Choco Book Values
Cake Book Values
Cake Fair Values
Cash and Receivable
350,000
180,000
170,000
Inventories
250,000
100,000
150,000
Land
700,000
120,000
240,000
Building and equipment
600,000
600,000
900,000
Patented technology
100,000
0
60,000
Accounts payable
300,000
120,000
150,000
Long-term debt
0
400,000
350,000
Common stock
750,000
300,000
Additional paid in capital
500,000
60,000
450,000
120,000
Revenues
350,000
160,000
Expenses
310,000
130,000
Q1. How much is the consideration transferred?
Q2. What is the consolidated balance for Land?
Q3. What is the consolidated balance for Accounts payable?
Q4. Prepare fair value allocation and
Q5. Prepare
Q6. Choco paid $14,000 in cash for legal fee. What is the journal entry?
Q7. Choco also paid $12,000 in cash for stock issuance cost. What is the journal entry?
Q8. Prepare consolidated
Cash and Receivable
Inventories
Land
Building and equipment
Patented technology
Goodwill
Total Assets
Accounts payable
Long-term debt
Total liabilities
Common stock
Additional paid in capital
Retained earnings 12/31
Total
Total liabilities and stockholders’ equity
Q.1
Consideraion Transferred
40,000 Shares * $32/share = $1280000
Q.2
Consolidated Balance for Land
Choco's BV is $ 700000 and Cakes Fair Value is $240000
Consolidated Balance is $940000
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