P42
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
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
Cash $300 $60
“Accounts receivable—net 460 100
Inventories 1,040 160
Land x00 200
Buildings—net 2,000 400
Equipment—net 1.000 oo
Total assets $5,600 $1,520
“Accounts payable S00 380
Note payable 1,200 400
Capital stock, $10 par oo 00
Other paid-in capital 1200
Retained earnings L000
‘otal liabilities and owners’ equity $5,600
REQUIRED: Prepare a balance sheet for Pet Corporation as of January 2, 2011, immediately after the
merger, assuming the merger is treated as an acquisitionp32
‘Allocation schedule for fair value/book value differential and consolidated balance
‘sheet at acquisition
‘Par Corporation acquired 70 percent ofthe outstanding common sock of Set Corporation on Janay
1, 2011 for $350000 cash. rmediaely afer this accuistion the balance shet information forthe two
compares was as foo in thon)
sa
arta Vane “Hoar
cao sn $40 sao
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— 2 3 2
py a ° &
angen FA ‘S is
2 ‘3 %
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etnies cn Seer Ey
nena $0 so so
Soman ” ic °
Otte 0p 10a =
Sanetering ary =
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‘An Introduction to Consolidated Financial Statements 6
REQUIRED,
1 Prepare a schedule allocate the ieence between the ai ae of he neste in Se andthe book
‘ite ofthe tees to eit and emia et ss
2. Prepare consid Balance ses fr Pat Corporation an Susi tamu 1.201Poa
‘alate toms hatmay appear consliated statements to year after acquisition
Re Cipae asud 8 pcetl de nen eck of Sk Cra SO 0 cao
Suny 201 on ch ae Se ke’ atoms of pel kf SUM nd
‘em arng eS,
“Tce we canes in te ost ok ee croton ie 2011 an 2012
‘AvDecmbor 012i ial hance of Poa le fas oan
nt ad
Sai “Be
See ait
cry
1. Ales met a ier ee ne of es ge a a a2
2 Tiere feo ae 2012 cae ems pee SRD
‘REQUIRED: Deas: ent hal pp i ans of he Capon
‘Si Sinun bauer Sune ae
a ee
Stace 1 Coan id cmp Deca
A contact 1 crate ecm Deemer 2002
5 icant 10 Neng et Deb 012