On January 1, 20X2, Plend Corporation acquired all of Stork
Corporation's assets and liabilities by issuing shares of its
common stock. Partial balance sheet data for the companies prior to
the business combination and immediately following the combination
are as follows:
Plend Corp. | Stork Corp. | ||||||||||||||
Book Value | Book Value | Combined Entity | |||||||||||||
Assets | |||||||||||||||
Cash | $ | 40,000 | $ | 10,000 | $ | 50,000 | |||||||||
Accounts Receivable | 60,000 | 30,000 | 88,000 | ||||||||||||
Inventory | 50,000 | 35,000 | 96,000 | ||||||||||||
Buildings & Equipment (net) | 300,000 | 110,000 | 430,000 | ||||||||||||
Goodwill | ? | ||||||||||||||
Total Assets | $ | 450,000 | $ | 185,000 | $ | ? | |||||||||
Liabilities and Equities | |||||||||||||||
Accounts Payable | $ | 32,000 | $ | 14,000 | $ | 46,000 | |||||||||
Bonds Payable | 150,000 | 70,000 | 220,000 | ||||||||||||
Bond Premium | 6,000 | 6,000 | |||||||||||||
Common Stock, $5 par | 100,000 | 40,000 | 126,000 | ||||||||||||
Additional Paid-In Capital | 65,000 | 28,000 | 247,000 | ||||||||||||
Retained Earnings | 97,000 | 33,000 | ? | ||||||||||||
Total Liabilities & Equities | $ | 450,000 | $ | 185,000 | $ | ? | |||||||||
Required:
e. What amount of goodwill, if any, will be reported by the
combined entity immediately following the combination?
f. What balance in retained earnings will the combined entity
report immediately following the combination?
g. If the depreciable assets held by Stork had an average remaining
life of 10 years at the date of acquisition, what amount of
depreciation expense will be reported on those assets in
20X2?
Goodwill be recorded at the amount excess paid over the value of identifible net assets.
Identifiable Net assets = Total Assets - Total liabilities (Excluding shareholder's fund)
Identifiable Net assets = 185000-14000-70000 = 101000
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On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing...
On January 1, 20X2, Plend Corporation acquired all of Stork Corporation's assets and liabilities by issuing shares of its common stock. Partial balance sheet data for the companies prior to the business combination and immediately following the combination are as follows: Plend Corp. Stork Corp. Book Value Book Value Combined Entity Assets Cash $ 40,000 $ 10,000 $ 50,000 Accounts Receivable 60,000 30,000 88,000 Inventory 50,000 35,000 96,000 Buildings & Equipment (net) 300,000 110,000 430,000 Goodwill ? Total Assets $...
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