Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts.
|
Sol Company |
|||
|
Padre |
Book Values |
Fair Values |
|
|
Cash |
$400,000 |
$120,000 |
$120,000 |
|
Receivables |
220,000 |
300,000 |
300,000 |
|
Inventory |
410,000 |
210,000 |
260,000 |
|
Land |
600,000 |
130,000 |
110,000 |
|
Building and equipment (net) |
600,000 |
270,000 |
330,000 |
|
Franchise agreements |
220,000 |
190,000 |
220,000 |
|
Accounts payable |
300,000 |
120,000 |
120,000 |
|
Accrued expenses |
90,000 |
30,000 |
30,000 |
|
Long term liabilities |
900,000 |
510,000 |
510,000 |
|
Common stock—$20 par value |
660,000 |
||
|
Common stock—$5 par value |
210,000 |
||
|
Additional paid in capital |
70,000 |
90,000 |
|
|
Retained earnings, 1/1 |
390,000 |
240,000 |
|
|
Revenues |
960,000 |
330,000 |
|
|
Expenses |
920,000 |
310,000 |
|
On December 31, Padre acquires Sol’s outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs. Determine the value that would be shown in Padre and Sol’s consolidated financial statements for each of the accounts listed.
|
Accounts |
|
|
Inventory |
Revenues |
|
Land |
Additional paid in capital |
|
Buildings and equipment |
Expenses |
|
Franchise agreements |
Retained earnings, 1/1 |