Financial Accounting

Using the following information , answer the following in a Word document:

P Corporation acquired 100 percent of S Company’s assets on January 1, 2011, by issuing 1,250,000 shares of its $1 par common stock. The common stock issue in the acquisition had a market value of $80.80 per share. Balance sheets of both companies immediately prior to the acquisition are shown below.

P Corporation

Balance Sheet

December 31, 2010

Assets

Cash $120,000,000

Accounts receivable $350,000,000

Inventories $135,000,000

Land $15,000,000

Plant, property, and equipment $80,000,000

Less: Accumulated depreciation ($42,000,000)

Total assets $658,000,000

Liabilities and Shareholders’ Equity

Accounts payable $215,000,000

Notes payable $85,000,000

Common stock $100,000,000

Paid-in capital in excess of par $157,000,000

Retained earnings $101,000,000

Total liabilities and SE $658,000,000

S Company

Balance Sheet

December 31, 2010

Assets

Cash $50,000,000

Accounts receivable $37,000,000

Inventories $18,000,000

Land $10,000,000

Plant, property, and equipment $35,000,000

Less: Accumulated depreciation ($21,000,000)

Total assets $129,000,000

Liabilities and Shareholders’ Equity

Accounts payable $32,000,000

Notes payable $8,000,000

Common stock $10,000,000

Paid-in capital in excess of par $28,000,000

Retained earnings $51,000,000

 

Total liabilities and SE $129,000,000