Summary information is given for SBMA, Inc. and PCIB Company at July 1, 2016. The quoted market price of SBMA and HIMYM shares are P36 and P40, respectively. SBMA Inc. HIMYM Inc. Book Value Fair Value Book Value Fair Value Current assets 8,000,000 9,000,000 24,000,000 24,000,000 Plant assets 22,000,000 26,000,000 26,000,000 25,000,000 Totals 30,000,000 35,000,000 50,000,000 49,000,000 Liabilities 5,000,000 5,000,000 15,000,000 15,000,000 Common Stocks, P10 10,000,000 20,000,000 APIC 1,000,000 3,000,000 Retained Earnings 14,000,000 12,000,000 Totals 30,000,000 50,000,000 HIMYM Inc. acquires all the net assets of SBMA by issuing 1,000,000 of its own shares. PCIB Company incurred the following out of pocket costs relating to the acquisition: Legal fees to arrange the business combination 25,000 Cost of shares SEC registration 142,000 Cost of printing and issuing new stock certificates 3,000 Indirect cost of combination 20,000 Finder’s fees 35,000 The total retained earnings of the surviving company after the combination is

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 54E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...

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Question

Summary information is given for SBMA, Inc. and PCIB Company at July 1, 2016. The quoted market price of SBMA and HIMYM shares are P36 and P40, respectively.

	SBMA Inc.		HIMYM Inc.
	Book Value	Fair Value		Book Value	Fair Value
Current assets	8,000,000	9,000,000		24,000,000	24,000,000
Plant assets	22,000,000	26,000,000		26,000,000	25,000,000
Totals	30,000,000	35,000,000		50,000,000	49,000,000

Liabilities	5,000,000	5,000,000		15,000,000	15,000,000
Common Stocks, P10	10,000,000			20,000,000
APIC	1,000,000			3,000,000
Retained Earnings	14,000,000			12,000,000
Totals	30,000,000			50,000,000


HIMYM Inc. acquires all the net assets of SBMA by issuing 1,000,000 of its own shares. PCIB Company incurred the following out of pocket costs relating to the acquisition:

Legal fees to arrange the business combination	25,000
Cost of shares SEC registration	142,000
Cost of printing and issuing new stock certificates	3,000
Indirect cost of combination	20,000
Finder’s fees	35,000

The total retained earnings of the surviving company after the combination is
Group of answer choices
11,980,000
13,980,000
13,920,000
11,920,000