The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands).
The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands).
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
Chapter12: Intangibles
Section: Chapter Questions
Problem 10MC
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The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands).
Atwood | Franz Co. | Franz Co. | |||||||||
Book Value | Book Value | Fair Value | |||||||||
12/31/2021 | 12/31/2021 | 12/31/2021 | |||||||||
Cash | $ | 870 | $ | 240 | $ | 240 | |||||
Receivables | 660 | 600 | 600 | ||||||||
Inventory | 1,230 | 420 | 580 | ||||||||
Land | 1,800 | 260 | 250 | ||||||||
Buildings (net) | 1,800 | 540 | 650 | ||||||||
Equipment (net) | 660 | 380 | 400 | ||||||||
Accounts payable | (570 | ) | (240 | ) | (240 | ) | |||||
Accrued expenses | (270 | ) | (60 | ) | (60 | ) | |||||
Long-term liabilities | (2,700 | ) | (1,020 | ) | (1,120 | ) | |||||
Common stock ($20 par) | (1,980 | ) | |||||||||
Common stock ($5 par) | (420 | ) | |||||||||
Additional paid-in capital | (210 | ) | (180 | ) | |||||||
(1,170 | ) | (480 | ) | ||||||||
Revenues | (2,880 | ) | (660 | ) | |||||||
Expenses | 2,760 | 620 | |||||||||
Note: Parenthesis indicate a credit balance
Assume an acquisition business combination took place at December 31, 2021. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid.
Compute fair value of the net assets acquired at the date of the acquisition.
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