Smith Company Balance Sheet July 1, 2015 Assets Liabilities and Equity $ 100,000 250,000 Current liabilities .. Bonds payable $ 80,000 500,000 Cash Inventory $ 580,000 Stockholders' equity: Common stock.. Paid-in capital in excess of par Retained earnings. Property, plant, and equipment: Land.. $200,000 $200,000 Buildings (net) Equipment (net) 250,000 100,000 420,000 $1,000,000 200,000 650,000 $1,000,000 Total liabilities and equity 120,000 Total assets
Smith Company is acquired by Roan Corporation on July 1, 2015. Roan exchanges 60,000 shares of its $1 par stock, with a fair value
of $18 per share, for the net assets of Smith Company.
Roan incurs the following costs as a result of this transaction:
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,000
Stock registration and issuance costs. . . . . . . . . . . . . . . 10,000
Total costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,000
The balance sheet of Smyth Company, on the day of the acquisition, is in the attachment:
The appraised fair values as of July 1, 2015, is as follows:
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,000
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220,000
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Bonds payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,000
Record the acquisition of Smyth Company on the books of Radar Corporation.
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