Williams Incorporated Balance Sheet December 31,2015 Assets Liabilities and Equity Current assets: Accounts payable $ 40,000 $ 50,000 300,000 Accounts receivable. Inventory $350,000 Stockholders' equity: Noncurrent assets: Common stock.. $ 40,000 $ 20,000 70,000 Paid-in capital in excess of par Retained earnings. Land. 110,000 250,000 Building (net) 90,000 $440,000 Total liabilities and equity 400,000 Total assets $440,000
Kiln Corporation is considering the acquisition of Williams Incorporated. Kiln has asked you, its accountant, to evaluate the various offers it might make to Williams Incorporated. The December 31, 2015,
The following fair values differ from existing book values:
Inventory . . . . . . . . . . . . . . . . . . . . $250,000
Land. . . . . . . . . . . . . . . . . . . . . . . . 40,000
Building . . . . . . . . . . . . . . . . . . . . . 120,000
Record the acquisition entry for Kiln Corporation that would result under each of the alternative offers. Value analysis is suggested.
1. Kiln Corporation issues 20,000 of its $10 par common stock with a fair value of $25 per share for the net assets of Williams Incorporated.
2. Kiln Corporation pays $385,000 in cash.
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