Summary information is given for SBMA, Inc. and PCIB Company at July 1, 2016. The quoted market price of SBMA and HIMYM shares are P36 and P40, respectively. SBMA Inc. HIMYM Inc. Book Value Fair Value Book Value Fair Value Current assets 8,000,000 9,000,000 24,000,000 24,000,000 Plant assets 22,000,000 26,000,000 26,000,000 25,000,000 Totals 30,000,000 35,000,000 50,000,000 49,000,000 Liabilities 5,000,000 5,000,000 15,000,000 15,000,000 Common Stocks, P10 10,000,000 20,000,000 APIC 1,000,000 3,000,000 Retained Earnings 14,000,000 12,000,000 Totals 30,000,000 50,000,000 HIMYM Inc. acquires all the net assets of SBMA by issuing 1,000,000 of its own shares. PCIB Company incurred the following out of pocket costs relating to the acquisition: Legal fees to arrange the business combination 25,000 Cost of shares SEC registration 142,000 Cost of printing and issuing new stock certificates 3,000 Indirect cost of combination 20,000 Finder’s fees 35,000 Calculate the goodwill from the business combination Group of answer choices 10,060,000 10,000,000 10,025,000 10,040,000
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Summary information is given for SBMA, Inc. and PCIB Company at July 1, 2016. The quoted market price of SBMA and HIMYM shares are P36 and P40, respectively.
|
SBMA Inc. |
|
HIMYM Inc. |
||
|
Book Value |
Fair Value |
|
Book Value |
Fair Value |
Current assets |
8,000,000 |
9,000,000 |
|
24,000,000 |
24,000,000 |
Plant assets |
22,000,000 |
26,000,000 |
|
26,000,000 |
25,000,000 |
Totals |
30,000,000 |
35,000,000 |
|
50,000,000 |
49,000,000 |
|
|
|
|
|
|
Liabilities |
5,000,000 |
5,000,000 |
|
15,000,000 |
15,000,000 |
Common Stocks, P10 |
10,000,000 |
|
|
20,000,000 |
|
APIC |
1,000,000 |
|
|
3,000,000 |
|
Retained Earnings |
14,000,000 |
|
|
12,000,000 |
|
Totals |
30,000,000 |
|
|
50,000,000 |
|
|
|
|
|
|
|
HIMYM Inc. acquires all the net assets of SBMA by issuing 1,000,000 of its own shares. PCIB Company incurred the following out of pocket costs relating to the acquisition:
Legal fees to arrange the business combination |
25,000 |
Cost of shares SEC registration |
142,000 |
Cost of printing and issuing new stock certificates |
3,000 |
Indirect cost of combination |
20,000 |
Finder’s fees |
35,000 |
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