On January 2, 2021, Pioneer Corporation issued 40,000 of its own $10 par common stock for all of the outstanding stock of Lake Corporation in an acquisition. Lake is dissolved. Additionally, Pioneer pays $75,000 for registration fees associated with the stock issuance, and $50,000 for other expenses related to the acquisition. The market price of Pioneer's stock on January 2, 2021 is $60 per share. Relevant balance sheet information for Pioneer and Lake Corporations on December 31, 2020 just before the combination is as follows (in thousands):
On January 2, 2021, Pioneer Corporation issued 40,000 of its own $10 par common stock for all of the outstanding stock of Lake Corporation in an acquisition. Lake is dissolved. Additionally, Pioneer pays $75,000 for registration fees associated with the stock issuance, and $50,000 for other expenses related to the acquisition. The market price of Pioneer's stock on January 2, 2021 is $60 per share. Relevant balance sheet information for Pioneer and Lake Corporations on December 31, 2020 just before the combination is as follows (in thousands):
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
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Transcribed Image Text:On January 2, 2021, Pioneer Corporation issued 40,000 of its own $10 par common stock for all of the outstanding stock of
Lake Corporation in an acquisition. Lake is dissolved. Additionally, Pioneer pays $75,000 for registration fees associated
with the stock issuance, and $50,000 for other expenses related to the acquisition. The market price of Pioneer's stock on
January 2, 2021 is $60 per share. Relevant balance sheet information for Pioneer and Lake Corporations on December 31,
2020 just before the combination is as follows (in thousands):
Lake
Pioneer
Historica Lake Fair
Historical Cost
I Cost
Value
250
30
30
Cash
300
75
145
Inventories
Other current assets
440
100
120
130
100
250
Land
Plant and equipment - net
Total assets
1,470
350
700
2,590
655
1,245
500
50
60
Liabilities
Capital Stock, $10 par
Additional paid-in-capital
Retained earnings
Total liabilities and owner's equity
1,200
355
350
150
540
100
2,590
655
-Required
5 1. Prepare the preliminary calculations for the acquisition of Lake.
2. Prepare all the journal entries to record the acquisition of Lake
(show all of your work and place your calculations in the cells.).
3. Prepare a balance sheet for Pioneer Corporation immediately after
the acquisition. (Prepare the worksheet to combine prior to
preparing the combined balance sheet.)
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