The financial statements for Campbell, Inc., and Newton Company for the year ended December 31, 2021, prior to the business combination whereby Campbell acquired Newton, are as follows (in thousands): Campbell Newton Revenues $2,600 $ 700 1,880 $ 720 Expenses 400 $ 300 $ 500 Net income Retained earnings, 1/1 $2,400 Net income 720 300 Dividends (270) Retained earning, 12/31 $2,850 $ 800 Cash $ 240 $ 230 Receivables and inventory Buildings (net) Equipment (net) 1,200 360 2,700 650 2,100 1,300 Total assets $6,240 $2,540 Liabilities $1,500 $ 720 Common stock 1,080 400 Additional paid-in capital 810 620 Retained earnings 2,850 800 Total liabilities & stockholders' equity $6,240 $2,540 On December 31, 2021, Campbell obtained a loan for $650 and used the proceeds, along with the transfer of 35 shares of its $10 par value common stock, in exchange for all of Newton's common stock. At the time of the transaction, Campbell's common stock had a fair value of $40 per share. In connection with the business combination, Campbell paid $25 to a broker for arranging the transaction and $30 in stock issuance costs. At the time of the transaction, Newton's equipment was actually worth $1,450 but its buildings were only valued at $590.

The financial statements for Campbell, Inc., and Newton Company for the year ended December 31, 2021, prior to the business combination whereby Campbell acquired Newton, are as follows (in thousands): Campbell Newton Revenues $2,600 $ 700 1,880 $ 720 Expenses 400 $ 300 $ 500 Net income Retained earnings, 1/1 $2,400 Net income 720 300 Dividends (270) Retained earning, 12/31 $2,850 $ 800 Cash $ 240 $ 230 Receivables and inventory Buildings (net) Equipment (net) 1,200 360 2,700 650 2,100 1,300 Total assets $6,240 $2,540 Liabilities $1,500 $ 720 Common stock 1,080 400 Additional paid-in capital 810 620 Retained earnings 2,850 800 Total liabilities & stockholders' equity $6,240 $2,540 On December 31, 2021, Campbell obtained a loan for $650 and used the proceeds, along with the transfer of 35 shares of its $10 par value common stock, in exchange for all of Newton's common stock. At the time of the transaction, Campbell's common stock had a fair value of $40 per share. In connection with the business combination, Campbell paid $25 to a broker for arranging the transaction and $30 in stock issuance costs. At the time of the transaction, Newton's equipment was actually worth $1,450 but its buildings were only valued at $590.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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