On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows: Peach Company Swartz CompanyCash $71,250 $13,190Accounts receivable (net) 99,260 20,070Inventory 63,300 26,980Plant and equipment (net) 99,340 39,970Land 27,990 21,440 Total assets $361,140 $121,650 Accounts payable $64,130 $16,800Notes payable 85,460 20,800Common stock, $20 par value 108,400 36,400Other contributed capital 58,280 23,800Retained earnings 44,870 23,850 Total equities $361,140 $121,650Any difference between the book value of equity and the value implied by the purchase price relates to goodwill. (b)Prepare a Computation and Allocation Schedule for the difference between book value and value implied by the purchase price.

Answer b) The consideration which is paid by the purchasing company in respect of taking over the…

Answered: On January 1, 2013, Peach Company…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 34P

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On January 1, 2013, Peach Company issued 1,390 of its $20 par value common shares with a fair value of $62 per share in exchange for the 1,820 outstanding common shares of Swartz Company in a purchase transaction. Registration costs amounted to $1,752, paid in cash. Just prior to the acquisition, the balance sheets of the two companies were as follows:

	*Peach Company*	*Swartz Company*
Cash	$71,250	$13,190
Accounts receivable (net)	99,260	20,070
Inventory	63,300	26,980
Plant and equipment (net)	99,340	39,970
Land	27,990	21,440
Total assets	$361,140	$121,650

Accounts payable	$64,130	$16,800
Notes payable	85,460	20,800
Common stock, $20 par value	108,400	36,400
Other contributed capital	58,280	23,800
Retained earnings	44,870	23,850
Total equities	$361,140	$121,650

Any difference between the book value of equity and the value implied by the purchase price relates to goodwill.

(b)

Prepare a Computation and Allocation Schedule for the difference between book value and value implied by the purchase price.

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