Prepare balance sheet after an acquisition On January 2, 2011, Pet Corporation enters into a business combination with Sea Corporation in which Sea is dissolved. Pet pays $1,650,000 for Sea, the...

Prepare balance sheet after an acquisition

On January 2, 2011, Pet Corporation enters into a business combination with Sea Corporation in which Sea is dissolved. Pet pays $1,650,000 for Sea, the consideration consisting of 66,000 shares of Pet $10 par common stock with a market value of $25 per share. In addition, Pet pays the following expenses in cash at the time of the merger:

Finders’ fee	$ 70,000
Accounting and legal fees	130,000
Registration and issuance costs of securities	80,000
$280,000

Balance sheet and fair value information for the two companies on December 31, 2010, immediately before the merger, is as follows (in thousands):

Pet Book Value	Sea Book Value	Sea Fair Value
Cash	$ 300	$ 60	$ 60
Accounts receivable—net	460	100	80
Inventories	1,040	160	240
Land	800	200	300
Buildings—net	2,000	400	600
Equipment—net	1,000	600	500
Total assets	$5,600	$1,520	$1,780
Accounts payable	$ 600	$ 80	$ 80
Note payable	1,200	400	360
Capital stock, $10 par	1,600	600
Other paid-in capital	1,200	100
Retained earnings	1,000	340
Total liabilities and owners’ equity	$5,600	$1,520

REQUIRED : Prepare a balance sheet for Pet Corporation as of January 2, 2011, immediately after the merger, assuming the merger is treated as an acquisition.

Answered Same DayDec 24, 2021

Answer To: Prepare balance sheet after an acquisition On January 2, 2011, Pet Corporation enters into a...

David answered on Dec 24 2021

118 Votes

Pet Corporation
Balance Sheet at January 2, 2011
Assets
Cash (300,000 + 60,000 – 280,000) 80,000
Accounts receivable – net (460,000 + 80,000 = 540,000) 540,000
Inventories 1,040,000 + 240,000 = 1,280,000) 1,280,000
Land (8000,000 + 300,000 = 1,100,000) 1,100,000
Buildings – net (2,000,000 + 600,000 = 2,600,000) 2,600,000
Equipment – net (1,000,000 + 500,000 = 1,500,000) 1,500,000
Goodwill (1,650,000 – 1,340,000 = 310,000) 310,000
Total assets ...

SOLUTION.PDF

Prepare balance sheet after an acquisition On January 2, 2011, Pet Corporation enters into a business combination with Sea Corporation in which Sea is dissolved. Pet pays $1,650,000 for Sea, the...

Answer To: Prepare balance sheet after an acquisition On January 2, 2011, Pet Corporation enters into a...

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment