Sun Corporation issues 40,000 shares of its common stock for all of the outstanding shares of Sullivan, Inc. Sunâs shares have a par value of $5 and a market value of $24 per share.
If Sullivan's net assets have book values and fair value of $690,000 and $1,000,000, respectively, what is the resulting amount of goodwill recognized on the post-acquisition balance sheet?
Sun Corporation issues 40,000 shares of its common stock for all of the outstanding shares of Sullivan, Inc. Sunâs shares have a par value of $5 and a market value of $24 per share.
If Sullivan's net assets have book values and fair value of $690,000 and $1,000,000, respectively, what is the resulting amount of goodwill recognized on the post-acquisition balance sheet?
Related questions
Acquisition Method The balance sheets of Petrello Company and Sanchez Company as of January 1, 2014, are presented below. On that date, after an extended period of negotiation, the two companies agreed to merge. To effect the merger, Petrello Company is to exchange its unissued common stock for all the outstanding shares of Sanchez Company in the ratio of 1 /2 share of Petrello for each share of Sanchez. Market values of the shares were agreed on as Petrello, $48; Sanchez, $24. The fair values of Sanchez Companyâs assets and liabilities are equal to their book values with the exception of plant and equipment, which has an estimated fair value of $720,000.
| Petrello | Sanchez | |||
| Cash | $ 480,000 | $ 200,000.00 | ||
| Receivables | $ 480,000 | $ 240,000.00 | ||
| Inventories | $ 2,000,000 | $ 240,000.00 | ||
| Plant and Equipment (net) | $ 3,840,000 | $ 800,000.00 | ||
| Total assets | $ 6,800,000 | $ 1,480,000.00 | ||
| Liabilities | $ 1,200,000 | $ 320,000.00 | ||
| Common Stock, $16 par value | $ 3,440,000 | $ 800,000.00 | ||
| Other contributed capital | $ 400,000 | $ - | ||
| Retained earnings | $ 1,760,000 | $ 360,000.00 | ||
| Total equities | $ 6,800,000 | $ 1,480,000.00 | ||
Prepare a balance sheet for Petrello Company immediately after the merger
