Question

Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also...

Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts.

Padre
Company

Sol Company

Book Values Book Values Fair Values
12/31 12/31 12/31
Cash $ 526,750 $ 88,800 $ 88,800
Receivables 222,750 359,000 359,000
Inventory 487,500 283,000 334,500
Land 610,000 136,000 115,400
Building and equipment (net) 677,500 326,000 392,300
Franchise agreements 245,000 243,000 280,700
Accounts payable (354,000 ) (134,000 ) (134,000 )
Accrued expenses (108,000 ) (35,000 ) (35,000 )
Longterm liabilities (977,500 ) (602,500 ) (602,500 )
Common stock—$20 par value (660,000 )
Common stock—$5 par value (210,000 )
Additional paid–in capital (70,000 ) (90,000 )
Retained earnings, 1/1 (542,500 ) (338,000 )
Revenues (994,500 ) (379,300 )
Expenses 937,000 353,000

Note: Parentheses indicate a credit balance.

On December 31, Padre acquires Sol’s outstanding stock by paying $426,000 in cash and issuing 11,700 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $27,500 as well as $7,000 in stock issuance costs.

Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed. (Input all amounts as positive values.)

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