Summary information is given for SBMA, Inc. and PCIB Company at July 1, 2016. The quoted market price of SBMA and HIMYM shares are P36 and P40, respectively.     SBMA Inc.   HIMYM Inc.   Book Value Fair Value   Book Value Fair Value Current assets                                 8,000,000 9,000,000   24,000,000 24,000,000 Plant assets                                       22,000,000 26,000,000   26,000,000 25,000,000 Totals    30,000,000 35,000,000   50,000,000 49,000,000             Liabilities    5,000,000 5,000,000   15,000,000 15,000,000 Common Stocks, P10                 10,000,000     20,000,000   APIC 1,000,000     3,000,000   Retained Earnings                         14,000,000     12,000,000   Totals 30,000,000     50,000,000               HIMYM Inc. acquires all the net assets of SBMA by issuing 1,000,000 of its own shares. PCIB Company incurred the following out of pocket costs relating to the acquisition:   Legal fees to arrange the business combination                                 25,000 Cost of shares SEC registration                                                                            142,000 Cost of printing and issuing new stock certificates                                 3,000 Indirect cost of combination                                                                     20,000 Finder’s fees                                                                                                  35,000   Calculate the goodwill from the business combination Group of answer choices 10,060,000 10,000,000 10,025,000 10,040,000

Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
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Summary information is given for SBMA, Inc. and PCIB Company at July 1, 2016. The quoted market price of SBMA and HIMYM shares are P36 and P40, respectively.

 

 

SBMA Inc.

 

HIMYM Inc.

 

Book Value

Fair Value

 

Book Value

Fair Value

Current assets                                

8,000,000

9,000,000

 

24,000,000

24,000,000

Plant assets                                      

22,000,000

26,000,000

 

26,000,000

25,000,000

Totals   

30,000,000

35,000,000

 

50,000,000

49,000,000

 

 

 

 

 

 

Liabilities   

5,000,000

5,000,000

 

15,000,000

15,000,000

Common Stocks, P10                

10,000,000

 

 

20,000,000

 

APIC

1,000,000

 

 

3,000,000

 

Retained Earnings                        

14,000,000

 

 

12,000,000

 

Totals

30,000,000

 

 

50,000,000

 

 

 

 

 

 

 

HIMYM Inc. acquires all the net assets of SBMA by issuing 1,000,000 of its own shares. PCIB Company incurred the following out of pocket costs relating to the acquisition:

 

Legal fees to arrange the business combination                                

25,000

Cost of shares SEC registration                                                                           

142,000

Cost of printing and issuing new stock certificates                                

3,000

Indirect cost of combination                                                                    

20,000

Finder’s fees                                                                                                 

35,000

 

Calculate the goodwill from the business combination

Group of answer choices
10,060,000
10,000,000
10,025,000
10,040,000
 
 
 
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