Busiensss Stuff

Accounting 4022_Fall 2015 [Chapter 2]

Exercise 2_20: This is a Business Combination that would be a Statutory Merger. In this type of Business Combination, the Acquiring Company, which is Arturo, acquires the assets and liabilities of the Acquired Company (Westmont). Westmont is dissolved and ceases to exist.

Acquistion Cost: $5,000,000

NFMVA $4,310,000

NBVA $3,000,000

Total Excess/Differential $2,000,000

Acquisition Cost is measured as the $4 Million of Cash plus the Stock issues at a market value of $1 Million on the date of acquisition.

The difference between the Acquisition Cost of $5 Million and the NFMVA of $4,310,000 is $690,000, which represents GOODWILL. The difference between the NFMVA [$4,310,000] and NBVA [$3,000,000], or $1,310,000 represents the Excess/Differential assigned to specific Assets as follows:

Inventory (30,000)

Land 240,000

BLD 300,000

Customer Relationships 800,000

0

Entries for Arturo:

|3/1/2015 |Inventory |$600,000 | |

| |Land |$990,000 | |

| |Building |$2,000,000 | |

| |Customer Relationships |$800,000 | |

| |Goodwill |$690,000 | |

| | Accounts Payable | |$80,000 |

| | Cash | |$4,000,000 |

| | Common Stock |...