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On January 1, 2021, Foster Corporation issues 1,200,000 shares of Its common stock for all of Evan Corporation's outstanding shares and Evan is dissolved. The fair value of Foster's common stock on that date is 126 per share. The book values and fair values of the accounts for each corporation at December 31, 2020 are as follows: Foster Company Book Value Evan Corporation Fair Value Book Value Fair Value Assets $ 25,000,000 5,000,000 $ 25,000,000 5,000,000 8,000,000 $ 100,000,000 $ 100,000,000 20,000,000 25,000,000 9,000,000 110,000,000 Cash Accounts receivable - net 20,000,000 20,000,000 10,000,000 150,000,000 45,000,000 S 255,000,000 Inventory 10,000,000 7,000,000 20,000,000 5,000,000 $ 62,000,000 Land 9,000,000 19,000,000 Buildings Accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Common stock ($10 par) Additional paid-in capital Retained earnings Total equities $ 14,000,000 10,000,000 $ 14,000,000 11,500,000 $ 30,000,000 $ 30,000,000 100,000,000 90,000,000 10,000,000 25,000,000 S 255,000,000 97.500,000 15,000,000 5,000,000 18,000,000 $ 62,000,000 Required: Prepare (a) the journal entry to record the business combination and (b) the balance sheet (in good form) of Foster Company on January 1, 2021 under the purchase method.

On January 1, 2021, Foster Corporation issues 1,200,000 shares of Its common stock for all of Evan Corporation's outstanding shares and Evan is dissolved. The fair value of Foster's common stock on that date is 126 per share. The book values and fair values of the accounts for each corporation at December 31, 2020 are as follows: Foster Company Book Value Evan Corporation Fair Value Book Value Fair Value Assets $ 25,000,000 5,000,000 $ 25,000,000 5,000,000 8,000,000 $ 100,000,000 $ 100,000,000 20,000,000 25,000,000 9,000,000 110,000,000 Cash Accounts receivable - net 20,000,000 20,000,000 10,000,000 150,000,000 45,000,000 S 255,000,000 Inventory 10,000,000 7,000,000 20,000,000 5,000,000 $ 62,000,000 Land 9,000,000 19,000,000 Buildings Accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Common stock ($10 par) Additional paid-in capital Retained earnings Total equities $ 14,000,000 10,000,000 $ 14,000,000 11,500,000 $ 30,000,000 $ 30,000,000 100,000,000 90,000,000 10,000,000 25,000,000 S 255,000,000 97.500,000 15,000,000 5,000,000 18,000,000 $ 62,000,000 Required: Prepare (a) the journal entry to record the business combination and (b) the balance sheet (in good form) of Foster Company on January 1, 2021 under the purchase method.

SWFT Comprehensive Vol 2020
SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
Publisher:Maloney
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 34P
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 Please answer required a and b

On January 1, 2021, Foster Corporation issues 1,200,000 shares of its common stock for all of Evan Corporation's outstanding shares and Evan is dissolved. The fair value of Foster's common stock on that date is 126 per share. The book values and fair values of the accounts for each corporation at December 31, 2020 are as follows: Foster Company Evan Corporation Book Value Book Value Fair Value Fair Value Assets $ 100,000,000 20,000,000 20,000,000 10,000,000 150,000,000 -45,000,000 $ 255,000,000 Cash $ 100,000,000 $ 25,000,000 5,000,000 8,000,000 9,000,000 19,000,000 $ 25,000,000 5,000,000 Accounts receivable - net 20,000,000 25,000,000 9,000,000 110,000,000 Inventory Land 10,000,000 7,000,000 20,000,000 5,000,000 $ 62,000,000 Buildings Accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Common stock ($10 par) Additional paid-in capital Retained earnings Total equities $ 14,000,000 11,500,000 $ 30,000,000 $ 30,000,000 97,500,000 $ 14,000,000 10,000,000 15,000,000 5,000,000 18,000,000 $ 62,000,000 100,000,000 90,000,000 10,000,000 25,000,000 S 255,000,000 Required: Prepare (a) the journal entry to record the business combination and (b) the balance sheet (in good form) of Foster Company on January 1, 2021 under the purchase method.
Transcribed Image Text:On January 1, 2021, Foster Corporation issues 1,200,000 shares of its common stock for all of Evan Corporation's outstanding shares and Evan is dissolved. The fair value of Foster's common stock on that date is 126 per share. The book values and fair values of the accounts for each corporation at December 31, 2020 are as follows: Foster Company Evan Corporation Book Value Book Value Fair Value Fair Value Assets $ 100,000,000 20,000,000 20,000,000 10,000,000 150,000,000 -45,000,000 $ 255,000,000 Cash $ 100,000,000 $ 25,000,000 5,000,000 8,000,000 9,000,000 19,000,000 $ 25,000,000 5,000,000 Accounts receivable - net 20,000,000 25,000,000 9,000,000 110,000,000 Inventory Land 10,000,000 7,000,000 20,000,000 5,000,000 $ 62,000,000 Buildings Accumulated depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Common stock ($10 par) Additional paid-in capital Retained earnings Total equities $ 14,000,000 11,500,000 $ 30,000,000 $ 30,000,000 97,500,000 $ 14,000,000 10,000,000 15,000,000 5,000,000 18,000,000 $ 62,000,000 100,000,000 90,000,000 10,000,000 25,000,000 S 255,000,000 Required: Prepare (a) the journal entry to record the business combination and (b) the balance sheet (in good form) of Foster Company on January 1, 2021 under the purchase method.
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