What total amount of additional paid-in capital will Campbell recognize from this acquisition?
What total amount of additional paid-in capital will Campbell recognize from this acquisition?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![QUESTION 1
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):
Revenues
Expenses
Net income
Retained earnings, 1/1
Net income
Dividends
Retained earning, 12/31
Cash
Receivables and inventory
Buildings (net)
Equipment (net)
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings
Campbell Newton
$ 2,600
$ 700
1,880
400
$300
$ 500
300
0
$ 800
$ 230
$ 720
$ 2,400
720
(270)
$ 2,850
$ 240
1,200
2,700
2,100
$ 6,240
$ 1,500
1,080
810
360
650
1,300
$ 2,540
$ 720
400
620
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.
What total amount of additional paid-in capital will Campbell recognize from this acquisition?
$1,400.
$1,020.
$1,105.
$1,080.
$1,050.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F12310c43-3316-4238-b996-7934b18215c3%2Fc9dcfa6f-b09f-46d6-9724-2622ac6523a5%2Fqgir8_processed.png&w=3840&q=75)
Transcribed Image Text:QUESTION 1
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):
Revenues
Expenses
Net income
Retained earnings, 1/1
Net income
Dividends
Retained earning, 12/31
Cash
Receivables and inventory
Buildings (net)
Equipment (net)
Total assets
Liabilities
Common stock
Additional paid-in capital
Retained earnings
Campbell Newton
$ 2,600
$ 700
1,880
400
$300
$ 500
300
0
$ 800
$ 230
$ 720
$ 2,400
720
(270)
$ 2,850
$ 240
1,200
2,700
2,100
$ 6,240
$ 1,500
1,080
810
360
650
1,300
$ 2,540
$ 720
400
620
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.
What total amount of additional paid-in capital will Campbell recognize from this acquisition?
$1,400.
$1,020.
$1,105.
$1,080.
$1,050.
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