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Purchase, Date of Acquisition

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EXERCISE 3-4 Purchase, Date of Acquisition;On January 1, 2010, Peach Company issued 1,500 of its $20 par value common shares with a;fair value of $60 per share in exchange for the 2,000 outstanding common shares of Swartz;Company in a purchase transaction. Registration costs amounted to $1,700, paid in cash. Just;prior to the acquisition, the balance sheets of the two companies were as follows;Peach Company Swartz Company;Cash $ 73,000 $ 13,000;Accounts receivable (net) 95,000 19,000;Inventory 58,000 25,000;Plant and equipment (net) 95,000 43,000;Land 26,000 22,000;Total assets $347,000 $122,000;Accounts payable $ 66,000 $ 18,000;Notes payable 82,000 21,000;Common stock, $20 par value 100,000 40,000;Other contributed capital 60,000 24,000;Retained earnings 39,000 19,000;Total equities $347,000 $122,000;Any difference between the book value of equity and the value implied by the purchase price;relates to goodwill.;A. Prepare the journal entry on Peach Company?s books to record the exchange of stock.;B. Prepare a Computation and Allocation Schedule for the difference between book value;and value implied by the purchase price.;C. Prepare a consolidated balance sheet at the date of acquisition.

 

Paper#34718 | Written in 18-Jul-2015

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