ILA Company agreed to pay $850,000 cash and issue 50,000 shares of its $10 par (20 current fair value a share on September 30, 2021, to COOKED Corporation for all the net assets of COOKED except cash. In addition, FILA agreed that if the fair market value of its ordinary share was not $20 a share or more on September 30, 2022, a sufficient number of additional ordinary shares would be issued to COOKED to make the ste market value of its FILA ordinary shareholdings equal to $1 million on that date. The statement of l position of COOKED on September 30, 2021 with related current fair values of assets and liabilities, is as follows: Book value Fair value Cash 100,000 100,000 Accounts receivable, net 300,000 300,000 Merchandise inventory 520,000 680,000 Prepaid Expenses 20,000 20,000 Land 180,000 180,000 Building 500,000 650,000 Equipment 1,000,000 1,250,000 Other Plant Assets 80,000 100,000 Book Value Fair Value Current liabilities 700,000 700,000 Long-term debt 500,000 480,000 Ordinary share, P5 par 600,000 Share premium 400,000 Retained earnings 500,000 Out-of-pocket costs of the business combination paid by FILA on September 30, 2021, were as follows: Audit fees (SEC registration statement)- $30,000 Finder's Fee-$35,000 Legal Fees: Business combination -$15,000; Legal fees (SEC registration statement)-$20,000 Printing Cost (securities and SEC registration statement)-$25,000 SEC registration fee-$350 Assume that on September 30, 2022, the market value of FILA Corp.'s ordinary share was $16 a share. Compute the added number of shares to be issued.
FILA Company agreed to pay $850,000 cash and issue 50,000 shares of its $10 par (20 current fair value a share on September 30, 2021, to COOKED Corporation for all the net assets of COOKED except cash. In addition, FILA agreed that if the fair market value of its ordinary share was not $20 a share or more on September 30, 2022, a sufficient number of additional ordinary shares would be issued to COOKED to make the ste market value of its FILA ordinary shareholdings equal to $1 million on that date. The statement of l position of COOKED on September 30, 2021 with related current fair values of assets and liabilities, is as follows:
|
Book value |
Fair value |
|
|
Cash |
100,000 |
100,000 |
|
|
300,000 |
300,000 |
|
Merchandise inventory |
520,000 |
680,000 |
|
Prepaid Expenses |
20,000 |
20,000 |
|
Land |
180,000 |
180,000 |
|
Building |
500,000 |
650,000 |
|
Equipment |
1,000,000 |
1,250,000 |
|
Other Plant Assets |
80,000 |
100,000 |
|
Book Value |
Fair Value |
|
|
Current liabilities |
700,000 |
700,000 |
|
Long-term debt |
500,000 |
480,000 |
|
Ordinary share, P5 par |
600,000 |
|
|
Share premium |
400,000 |
|
|
|
500,000 |
Out-of-pocket costs of the business combination paid by FILA on September 30, 2021, were as follows:
Audit fees (SEC registration statement)- $30,000
Finder's Fee-$35,000
Legal Fees: Business combination -$15,000; Legal fees (SEC registration statement)-$20,000
Printing Cost (securities and SEC registration statement)-$25,000
SEC registration fee-$350
Assume that on September 30, 2022, the market value of FILA Corp.'s ordinary share was $16 a share.
Compute the added number of shares to be issued.
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