FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 9,000 shares of
its $11 par value common stock to acquire all of Staple Company's assets. Palm shares currently are trading at $55, and Staple $6 par
value shares are trading at $19 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows:
Balance Sheet Item
Assets
Cash and Receivables
Land
Buildings and Equipment (net)
Total Assets
Equities
Common Stock
Additional Paid-In Capital
Retained Earnings
Total Equities
Palm Corporation
Book Value
a. Common Stock
b. Cash and Receivables
c. Land
d. Buildings and Equipment (net)
e. Goodwill
f. Additional paid-In Capital
g. Retained Earnings
$ 158,000
117,000
307,000
$ 582,000
$ 197,000
18,000
367,000
$ 582,000
Fair Value
Amounts
$ 158,000
184,000
419,000
$ 761,000
Staple Company
Book Value
$ 60,000
65,000
163,000
$ 288,000
$ 93,000
8,300
186,700
$ 288,000
Fair Value
Required:
What amount will be reported immediately following the business combination for each of the following items in the combined
company's balance sheet?
$ 60,000
81,000
216,000
$ 357,000
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Transcribed Image Text:Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 9,000 shares of its $11 par value common stock to acquire all of Staple Company's assets. Palm shares currently are trading at $55, and Staple $6 par value shares are trading at $19 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows: Balance Sheet Item Assets Cash and Receivables Land Buildings and Equipment (net) Total Assets Equities Common Stock Additional Paid-In Capital Retained Earnings Total Equities Palm Corporation Book Value a. Common Stock b. Cash and Receivables c. Land d. Buildings and Equipment (net) e. Goodwill f. Additional paid-In Capital g. Retained Earnings $ 158,000 117,000 307,000 $ 582,000 $ 197,000 18,000 367,000 $ 582,000 Fair Value Amounts $ 158,000 184,000 419,000 $ 761,000 Staple Company Book Value $ 60,000 65,000 163,000 $ 288,000 $ 93,000 8,300 186,700 $ 288,000 Fair Value Required: What amount will be reported immediately following the business combination for each of the following items in the combined company's balance sheet? $ 60,000 81,000 216,000 $ 357,000
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