Question
Lucky's acquires Waterview, Inc., by issuing 40,000 shares of $1 par common stock with a market...
Lucky's acquires Waterview, Inc., by issuing 40,000 shares of $1
par common stock with a market price of $25 per share on the
acquisition date and paying $125,000 cash. The assets and
liabilities on Waterview’s balance sheet were valued at fair values
except equipment that was undervalued by $300,000. There was also
an unrecorded patent valued at $40,000, as well as an unrecorded
trademark valued at $75,000. In addition, the agreement provided
for additional consideration, valued at $60,000, if certain
earnings targets were met.
The pre-acquisition balance sheets for the two companies
at acquisition date are presented below.
|
Lucky's |
Waterview |
|
|
Cash |
$ 300,000 |
$ 260,000 |
|
Accounts receivable |
250,000 |
135,000 |
|
Inventory |
254,000 |
275,000 |
|
Property, plant, and equipment |
2,300,000 |
356,500 |
|
$3,104,000 |
$1,026,500 |
|
|
Accounts payable |
$ 45,000 |
$ 37,500 |
|
Salaries and taxes payable |
450,000 |
46,000 |
|
Notes payable |
500,000 |
450,000 |
|
Common stock |
250,000 |
60,000 |
|
Additional paid-in capital |
950,000 |
106,500 |
|
Retained earnings |
909,000 |
326,500 |
|
$3,104,000 |
$1,026,500 |
Compute consolidated inventory.
Select one:
A. $254,000
B. $529,000
C. $ 21,000
D. $604,000
Compute consolidated identifiable intangible assets.
Select one:
A. $175,000
B. $ 75,000
C. $115,000
D. $ 40,000
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