Combined Balance Sheet
The following balance sheets were prepared for Adam Corporation and Best Company on January 1, 20X2, just before they entered into a business combination:
Item | Adam Corporation | Best Company | ||
Book Value | Fair Value | Book Value | Fair Value | |
Cash and Receivables | $150,000 | $150,000 | $ 90,000 | $ 90,000 |
Inventory | 3,00,000 | 3,80,000 | 70,000 | 1,60,000 |
Buildings and Equipment | 6,00,000 | 4,30,000 | 2,50,000 | 2,40,000 |
Less: Accumulated Depreciation | (250,000) | ________ | -80,000 | ________ |
Total Assets | $800,000 | $960,000 | $330,000 | $490,000 |
Accounts Payable | $ 75,000 | $ 75,000 | $ 50,000 | $ 50,000 |
Notes Payable | 2,00,000 | 2,15,000 | 30,000 | 35,000 |
Common Stock: |
|
|
|
|
$8 par value | 1,80,000 |
|
|
|
$6 par value |
|
| 90,000 |
|
Additional Paid-In Capital | 1,40,000 |
| 55,000 |
|
Retained Earnings | 2,05,000 |
| 1,05,000 |
|
Total Liabilities and Equities | $800,000 |
| $330,000 |
|
Adam acquired all of Best Company’s assets and liabilities on January 1, 20X2, in exchange for its common shares. Adam issued 8,000 shares of stock to complete the business combination.
Required
Prepare a balance sheet of the combined company immediately following the acquisition, assuming Adam’s shares were trading at $60 each.
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