Allocation schedule and balance sheet
The balance sheets of Pub Corporation and Sun Corporation at December 31, 2010, are summarized with fair value information as follows (in thousands):
|
Pub Corporation |
Sun Corporation |
|||
|
Assets |
Book Value |
Fair Value |
Book Value |
Fair Value |
|
Cash |
$115 |
$115 |
$ 10 |
$ 10 |
|
Receivables—net |
40 |
40 |
20 |
20 |
|
Inventories |
120 |
150 |
50 |
30 |
|
Land |
45 |
100 |
30 |
100 |
|
Buildings—net |
200 |
300 |
100 |
150 |
|
Equipment—net |
180 |
245 |
90 |
150 |
|
Total assets |
$700 |
$950 |
$300 |
$460 |
|
Equities |
||||
|
Accounts payable |
$ 90 |
$ 90 |
$ 30 |
$ 30 |
|
Other liabilities |
100 |
90 |
60 |
70 |
|
Capital stock, $10 par |
300 |
100 |
||
|
Other paid in capital |
100 |
80 |
||
|
Retained earnings |
110 |
30 |
||
|
Total equities |
$700 |
$300 |
||
On January 1, 2011, Pub Corporation acquired all of Sun’s outstanding stock for $300,000. Pub paid $100,000 cash and issued a five year, 12 percent note for the balance. Sun was dissolved.
REQUIRED
1. Prepare a schedule to show how the investment cost is allocated to identifiable assets and liabilities.
2. Prepare a balance sheet for Pub Corporation on January 1, 2011, immediately after the acquisition.