Incomplete Data Following Purchase
On January 1, 20X1, Alpha Corporation acquired all of Bravo Company’s assets and liabilities by issuing shares of its S3 par value stock to the owners of Bravo Company in a business combination. Alpha also made a cash payment to Banker Corporation for stock issue costs. Partial balance sheet data for Alpha and Bravo, before the cash payment and issuance of shares, and a combined balance sheet following the business combination are as follows:
| Alpha Corporation | Bravo Company |
| |
| Book Value | Book Value | Fair Value | Combined Entity |
Cash | $ 65,000 | $ 15,000 | $ 15,000 | $ 56,000 |
Accounts Receivable | 105,000 | 30,000 | 30,000 | 135,000 |
Inventory | 210,000 | 90,000 | ? | 320,000 |
Buildings and Equipment (net) | 400,000 | 210,000 | 293,000 | 693,000 |
Goodwill | _______ | __________ | __________ | ? |
Total Assets | $780,000 | $345,000 | $448,000 | $ ? |
Accounts Payable | $ 56,000 | $ 22,000 | $ 22,000 | $ 78,000 |
Bonds Payable | 200,000 | 120,000 | 120,000 | 320,000 |
Common Stock | 96,000 | 70,000 |
| 117,000 |
Additional Paid-In Capital | 234,000 | 42,000 |
| 553,000 |
Retained Earnings | 194,000 | 91,000 | _______ | ? |
Total Liabilities and Equities | $780,000 | $345,000 | $142,000 | $ ? |
Required
a. What number of its $5 par value shares did Bravo have outstanding at January 1, 20X1?
b. Assuming that all ofBravo’s shares were issued when the company was started, what was the price per share received at the time of issue?
c. How many shares of Alpha were issued at the date of combination?
d. What amount of cash did Alpha pay as stock issue costs?
e. What was the market value of Alpha’s shares issued at the date of combination?
f. What was the fair value of Bravo’s inventory at the date of combination?
g. What was the fair value of Bravo’s net assets at the date of combination?
h. What amount of goodwill, if any, will be reported in the combined balance sheet following the combination?
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