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Assignment 1 Ad. ACC

This document provides information to prepare balance sheets for Pop Corporation and Son Corporation after their acquisition on January 2, 2016. It lists the pre-acquisition balance sheets for both companies and notes that Pop issued stock worth $9.6 million to acquire all of Son's stock. It also lists expenses related to the acquisition that Pop incurred. The second part provides additional financial information for Pop to allocate the acquisition cost and account for its investment in Son for 2016.

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Farhan Maulana
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115 views

Assignment 1 Ad. ACC

This document provides information to prepare balance sheets for Pop Corporation and Son Corporation after their acquisition on January 2, 2016. It lists the pre-acquisition balance sheets for both companies and notes that Pop issued stock worth $9.6 million to acquire all of Son's stock. It also lists expenses related to the acquisition that Pop incurred. The second part provides additional financial information for Pop to allocate the acquisition cost and account for its investment in Son for 2016.

Uploaded by

Farhan Maulana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Assignment 1

Chapter 1, P1-1. Prepare balance sheet after acquisition Comparative balance sheets for Pop and

Son Corporations at December 31, 2015, are as follows (in thousands). On January 2, 2016, Pop

issues 240,000 shares of its stock with a market value of $40 per share for all the outstanding

shares of Son Corporation in an acquisition. Son is dissolved. The recorded book values reflect

fair values, except for the buildings of Pop, which have a fair value of $6,400,000, and the

current assets of Son, which have a fair value of $1,600,000.

Pop pays the following expenses in connection with the business combination:

Costs of registering and issuing securities $240,000

Other direct costs of combination $400,000

1. Prepare the balance sheet of Pop Corporation immediately after the acquisition

Figuring out the balance sheet:

Current assets 520,000 + 240,000 + 160,000 – 160,000 = 760,000

Land2 00,000 + 400,000 = 600,000

Buildings 1,200,000 + 400,000 = 1,600,000

Equipment 880,000 + 960,000 = 1,840,000

Current liabilities 200,000 + 240,000 = 440,000

Capital stock 2,000,000 + 600,000 = 2,600,000

Additional paid-in capital 200,000 + (40-10=30 * 60,000) -60,000 =1,940,000

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https://www.coursehero.com/file/43688160/Assignment-1-Ad-ACCdocx/
Retained earnings 400,000 – 100,000 = 300,000

Pop and Son Corporation

Balance Sheet at

January 2, 2016

Assets

Current assets 760,000

Land 600,000

Building---net 1,600,000

Equipment---net 1,840,000

Goodwill 480,000

Total assets 5,280,000

Liabilities and Stockholders'

EquityCurrent liabilities 440,000

Capital stock, $10 par 2,600,000

Additional paid-in capital 940,000

Retained earnings 300,000

Total liabilities & stockholders’ equity 5,280,000

Chapter 2, P2-5. Prepare an allocation schedule; compute income and the investment balance.

Pop Corporation paid $1,680,000 for a 30 percent interest in Son Corporation’s outstanding

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voting stock on January 1, 2016. The book values and fair values of Son’s assets and liabilities

on January 1, along with amortization data, are as follows (in thousands). Son Corporation

reported net income of $1,200,000 for 2016 and paid dividends of $600,000.

1. Prepare a schedule to allocate the investment fair values/book value differentials

relating to Pop’s investment in Son.

2. Calculate Pop’s income from Son for 2016.

3. Determine the balance of Pop’s Investment in Son account at December 31, 2016

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