Balance sheet immediately following the merger. Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

Question

Want to see more full solutions like this?

Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000

Table (5)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Pamrod Manufacturing acquired all the assets and liabilities of Stafford Industries on January 1, 20X2, in exchange for 4,000 shares of Pamrod's $20 par value common stock. Balance sheet data for both companies just before the merger are given as follows: Balance Sheet Items Assets Cash Accounts Receivable Inventory Land Buildings and Equipment Less: Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Bonds Payable Common Stock: $20 par value $5 par value Additional Paid-In Capital Retained Earnings Total Liabilities and Equities Pamrod Manufacturing Book Value $ 70,000 100,000 200,000 50,000 600,000} (250,000) $ 779,000 $ 50,000 300,000 200,000 40,000 180,000 $ 770,000 Fair Value 70,000 100,000 375,000 80,000 540,000 $1,165,000 $ 50,000 310,000 Stafford Industries Book Value $ 30,000 60,000 100,000 40,000 400,000 (150,000) $ 480,000 $ 10,000 150,000 100,000 20,000 200,000 $ 480,000 Fair Value $ 30,000 60,000 160,000 30,000 350,000 $630,000 $ 10,000 145,000…

The balance sheets of Petrello Company and Sanchez Company as of January 1, 2014, are presented below. On that date, after an extended period of negotiation, the two companies agreed to merge. To effect the merger, Petrello Company is to exchange its unissued common stock for all the outstanding shares of Sanchez Company in the ratio of 1/2 share of Petrello for each share of Sanchez. Market values of the shares were agreed on as Petrello, $52; Sanchez, $26. The fair values of Sanchez Company’s assets and liabilities are equal to their book values with the exception of plant and equipment, which has an estimated fair value of $707,190. Petrello Sanchez Cash $498,860 $220,000 Receivables 495,790 237,690 Inventories 2,104,300 252,560 Plant and equipment (net) 3,818,630 853,200 Total assets $6,917,580 $1,563,450 Current Liabilities $1,209,800 $318,670 Common stock ($16 par value) 3,563,480 800,000 Other contributed…

P Company issues Php500,000 shares of its own Php10 par common stock for the net assets of S Company in a merger consummated on July 1, 2020. On this date, P stock is quoted at P20 per share. Summary of Balance sheet data for the two companies at July 1, 2020, just before combination, are as follows: P S Current Assets Plant Assets Total Assets 18,000,000 22,000,000 40,000,000 12,000,000 20,000,000 3,000,000 5,000,000 40,000,000 1,500,000 6,500,000 8,000,000 2,000,000 3,000,000 1,000,000 2,000,000 8,000,000 Liabilities Common Stock, P10 par Share Premium Retained Earnings Total Equities What is the total assets after of P after the business combination?

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000

Table (5)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000

Table (5)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000

Table (5)

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000

Table (5)

Answer 6

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

Answer 7

Chapter 1, Problem 1.37P

a.

To determine

To prepare: Balance sheet immediately following the merger.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

Answer 8

a.

Expert Solution

Explanation of Solution

The balance sheet immediately following the acquisition:

Company BSCombined Balance SheetJanuary 1, 20X3
Assets	Amount ($)	Amount ($)	Liabilities	Amount ($)	Amount ($)
Current Assets			Current Liabilities
Cash and Receivables		110,000	Current Liabilities		100,000
Inventory		142,000
			Common Stock
Fixed Assets			Capital Stock		214,000
Land		115,000	Capital in excess of Par value		216,000
Plant and equipment	540,000		Retained Earnings		240,000
Less: Accumulated depreciation	(150,000)	390,000
Goodwill		13,000

		770,000			770,000

Table (1)

Working Note:

1. Calculation of goodwill:

Particulars	Amount ($)
Fair value of compensation given (700×$300)	210,000
Less: Fair value of net assets acquired ($217,000−$20,000)	(197,000)
Goodwill	13,000

Table (2)

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

Answer 13

b.

1

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,100 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

Answer 14

b.

1

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,100))	222,000
Capital in excess of par value [$20,000+($300−$20)×1,100]	328,000
Retained earnings	240,000
Total	790,000

Table (3)

Answer 15

b.

1

Expert Solution

Answer 16

b.

1

Expert Solution

Answer 17

Expert Solution

Answer 18

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

Answer 19

2

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 1,800 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

Answer 20

2

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×1,800))	236,000
Capital in excess of par value [$20,000+($300−$20)×1,800]	524,000
Retained earnings	240,000
Total	1,000,000

Table (4)

Answer 21

2

Expert Solution

Answer 22

2

Expert Solution

Answer 23

Expert Solution

Answer 24

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000

Table (5)

Answer 25

3

To determine

To prepare: The stockholders’ equity section of the combined company by issuing 3,000 shares of common.

Introduction: Internal expansion refers to situation in a company forms a subsidiary by transferring some of its assets and liabilities and in exchange of ownership shares. Shares of the subsidiary is either provided to the shareholders in addition to their existing shares (Spin off) or in exchange of their existing shares (split off).

Answer 26

3

Expert Solution

Explanation of Solution

Calculation of stockholders’ equity:

Particulars	Amount ($)
Capital Stock ($200,000+($20×3,000))	260,000
Capital in excess of par value [$20,000+($300−$20)×3,000]	860,000
Retained earnings	240,000
Total	1,360,000