Question

Prepare balance sheet after acquisition Comparative balance sheets for Pop and Son Corporations at December 31,...

Prepare balance sheet after acquisition

Comparative balance sheets for Pop and Son Corporations at December 31, 2015, are as follows (in thousands):

Pop Son
Current assets $2,080 $ 960
Land 800 1,600
Buildings—net 4,800 1,600
Equipment—net 3,520 3,840
Total assets $11,200 $8,000
Current liabilities $ 800 $ 960
Capital stock, $10 par 8000 3,200
Additional paid-in capital 800 2,240
Retained earnings 1,600 1,600
Total equities $11,200 $8,000

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

REQUIRED: Prepare the balance sheet of Pop Corporation immediately after the acquisition.

Business   Accounting   
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Answer:

POP CORPORATION
Balance Sheet at January 2, 2016 (in thousands)
Assets
Current Assets (2080+960+640-640) 3040
Land (800+1600) 2400
Building - Net (4800+1600) 6400
Equipment - Net (3520+3840) 7360
Goodwill 1920
Total Assets 21120
Liabilities and Stockholders Equity
Current liability (800+960) 1760
Capital Stack $10 par (8000+2400) 10400
Additional paid in capital (800+(40-10)*240-240) 7760
Retained Earnings (1600-400) 1200
Total Liabilities and Stockholders equity 21120
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