Calculate shares to be issued, record pooling. After lengthy negotiations, Fischer Industries and Taylor International decided to merge on January 1, 20X2. This transaction meets the requirements for a pooling of interests, and Fischer will be the issuer. Immediately prior to the pooling, Taylor International prepared the following balance sheet:
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Taylor International |
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Assets |
Liabilities and Equity |
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Current assets |
$400,000 |
Current liabilities |
$100,000 |
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Property, plant, and equipment |
2,200,000 |
Bonds payable |
800,000 |
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Accumulated depreciation |
500,000 |
Stockholders’ equity: |
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Common stock ($10 par) |
$200,000 |
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Retained earnings |
1,000,000 |
1,200,000 |
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Total assets |
$2,100,000 |
Total liabilities and equity |
$2,100,000 |
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Negotiations revolved around what Taylor felt its business was worth and what Fischer was willing to pay. It was finally agreed that the value of Taylor’s net assets, including company goodwill, was $1,800,000 and would be paid with $5 par common stock having a fair value of $50. Fischer Industries will issue the required number of previously unissued shares in exchange for all of the net assets of Taylor International. The following independent appraisals have been made:
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Property, plant, and equipment |
$2,000,000 |
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Bonds payable |
750,000 |
In consummating the transaction, Fischer Industries incurred $5,000 of direct acquisition costs and $20,000 for stock registration and issuance.
1. Determine the number of shares of stock that Fischer Industries will issue.
2. Record the pooling of interests on the books of Fischer Industries.
3. What entry would Taylor International make to record the receipt of the shares and their distribution to the shareholders in order to liquidate the company?