Question

On July 1, TruData Company issues 12,600 shares of its common stock with a $5 par value and a $35 fair value in exchange for all of Webstat Company’s outstanding voting shares. Webstat’s precombination book and fair values are shown below along with book values for TruData’s accounts.

	TruData			Webstat			Webstat
	Book Values			Book Values			Fair Values
Revenues (1/1 to 7/1)	$	(320,600	)	$	(142,000	)
Expenses (1/1 to 7/1)		164,000			98,000
Retained earnings, 1/1		(134,000	)		(170,000	)
Cash and receivables		168,000			52,000		$	52,000
Inventory		180,000			158,000			182,000
Patented technology (net)		238,000			176,000			208,000
Land		384,000			214,000			236,000
Buildings and equipment (net)		120,000			90,000			90,000
Liabilities		(508,000	)		(368,000	)		(348,000	)
Common stock		(282,000	)		(72,000	)
Additional paid-in capital		(9,400	)		(36,000	)

On its acquisition-date consolidated balance sheet, what amount should TruData report as common stock?

Multiple Choice

• $72,000.

• $282,000.

• $345,000.

• $354,000.

Answer 1

Fair Value is $35 and Par value is $5 the differnce to be recorded as goodwill Only those shares at par value shall be recorded in the balance sheet In the given case par value is $63000(12600*5), hence this amount shall be added to the value of common stock before the acquistion TruData Common Stock before acquisition Common stock issued - (12600*$5) Acquisition date consolidated baalnce sheet amount for common stock 282000 63000 345000 therefore Option Cis Correct

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