The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands). AtwoodFranz Co.Franz Co.Book ValueBook ValueFair Value 12/31/202112/31/202112/31/2021Cash$870 $240 $240 Receivables 660 600 600 Inventory 1,230 420 580 Land 1,800 260 250 Buildings (net) 1,800 540 650 Equipment (net) 660 380 400 Accounts payable (570) (240) (240)Accrued expenses (270) (60) (60)Long-term liabilities (2,700) (1,020) (1,120)Common stock ($20 par) (1,980) Common stock ($5 par) (420) Additional paid-in capital (210) (180) Retained earnings 1/1/18 (1,170) (480) Revenues (2,880) (660) Expenses 2,760 620 Note: Parenthesis indicate a credit balance Assume an acquisition business combination took place at December 31, 2021. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid. Compute fair value of the net assets acquired at the date of the acquisition.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands).

	Atwood	Franz Co.	Franz Co.
Book Value	Book Value	Fair Value
	12/31/2021	12/31/2021	12/31/2021
Cash	$	870		$	240		$	240
Receivables		660			600			600
Inventory		1,230			420			580
Land		1,800			260			250
Buildings (net)		1,800			540			650
Equipment (net)		660			380			400
Accounts payable		(570	)		(240	)		(240	)
Accrued expenses		(270	)		(60	)		(60	)
Long-term liabilities		(2,700	)		(1,020	)		(1,120	)
Common stock ($20 par)		(1,980	)
Common stock ($5 par)					(420	)
Additional paid-in capital		(210	)		(180	)
Retained earnings 1/1/18		(1,170	)		(480	)
Revenues		(2,880	)		(660	)
Expenses		2,760			620

Note: Parenthesis indicate a credit balance

Assume an acquisition business combination took place at December 31, 2021. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid.

Compute fair value of the net assets acquired at the date of the acquisition.

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