On January 1, Pan Corporation pays $400,000 cash and also issues 36,000 shares of $10 par common stock with a market value of $660,000 for all the outstanding common shares of Sis Corporation. In addition, Pan pays $60,000 for registering and issuing the 36,000 shares and $140,000 for the other direct costs of the business combination, in which Sis Corporation is dissolved. Summary balance sheet information for the companies immediately before the merger is as follows (in thousands):
| Pan Book Value | Sis Book Value | Sis Fair Value |
Cash | $ 700 | $ 80 | $ 80 |
Inventories | 240 | 160 | 200 |
Other current assets | 60 | 40 | 40 |
Plant assets—net | 520 | 360 | 560 |
Total assets | $1,520 | $640 | $880 |
Current liabilities | $ 320 | $ 60 | $ 60 |
Other liabilities | 160 | 100 | 80 |
Common stock, $10 par | 840 | 400 |
|
Retained earnings | 200 | 80 |
|
Total liabilities and owners’ equity | $1,520 | $640 |
|
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