On January 1, 20x3, PURE Products Corporation issued 12,000 shares of its $10 pa
ID: 2368129 • Letter: O
Question
On January 1, 20x3, PURE Products Corporation issued 12,000 shares of its $10 par value stock to acquire the net assets of Light Steel Company Underling book value and fair value information for the balance sheet items of Light Steel at the time of acquisition follow: BALANCE SHEET ITEM BOOK VALUE FAIR VALUE
Cash $ 60,000 $ 60,000
Accounts Receivable 100,000 100,000
Inventory (LIFO basis) 60,000 115,000
Land 50,000 70,000
Buildings and Equipment 400,000 350,000
Less: Accumulated Depreciation (150,000) ---
Total Assets $520,000 $695,000
Accounts Payable $ 10,000 $ 10,000
Bonds Payable 200,000 180,000
Common Stock ($15 par value) 150,000
Additional Paid-In Capital 70,000
Retained Earnings 90,000
Total Liabilities and Equities $520,000
Light Steel shares were selling at $18 and PURE Products shares were selling at $50 just before the merger announcement. Additional cash payments made by PURE Products in completing the acquisition were:
Finder
Explanation / Answer
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