Sontag Corporation’s net assets have fair values as described below. Fair Value Current assets $250,000 Land 800,000 Buildings and equipment 1,000,000 Loans payable (300,000) The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,500,000, not previously reported on Sontag’s books, also are recognized as acquired assets. Required a. Prepare a schedule to calculate the gain on acquisition. Use a negative sign with any answer that reduces the fair value of net assets (left column only). Price paid Answer Fair value of identifiable net assets: Current assets 250,000 Land Answer Buildings and equipment Answer Identifiable intangibles Answer Loans payable Answer Answer Gain on acquisition Answer
Sontag Corporation’s net assets have fair values as described below. Fair Value Current assets $250,000 Land 800,000 Buildings and equipment 1,000,000 Loans payable (300,000) The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,500,000, not previously reported on Sontag’s books, also are recognized as acquired assets. Required a. Prepare a schedule to calculate the gain on acquisition. Use a negative sign with any answer that reduces the fair value of net assets (left column only). Price paid Answer Fair value of identifiable net assets: Current assets 250,000 Land Answer Buildings and equipment Answer Identifiable intangibles Answer Loans payable Answer Answer Gain on acquisition Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Sontag Corporation’s net assets have fair values as described below.
| Fair Value | |
|---|---|
| Current assets | $250,000 |
| Land | 800,000 |
| Buildings and equipment | 1,000,000 |
| Loans payable | (300,000) |
The Pratt Company pays $3,000,000 for Sontag Corporation, and records the acquisition as a merger. Pratt Company determines that identifiable intangibles valued at $1,500,000, not previously reported on Sontag’s books, also are recognized as acquired assets.
Required
a. Prepare a schedule to calculate the gain on acquisition.
Use a negative sign with any answer that reduces the fair value of net assets (left column only).
| Price paid | Answer
|
||
| Fair value of identifiable net assets: | |||
| Current assets | 250,000 | ||
| Land | Answer
|
||
| Buildings and equipment | Answer
|
||
| Identifiable intangibles | Answer
|
||
| Loans payable | Answer
|
Answer
|
|
| Gain on acquisition | Answer
|
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