On July 1, TruData Company issues 13,400 shares of its common stock with a $5 par...

On July 1, TruData Company issues 13,400 shares of its common stock with a $5 par value and a $35 fair value in exchange for all of Webstat Company’s outstanding voting shares. Webstat’s precombination book and fair values are shown below along with book values for TruData’s accounts.

	TruData			Webstat			Webstat
	Book Values			Book Values			Fair Values
Revenues (1/1 to 7/1)	$	(292,600	)	$	(140,000	)
Expenses (1/1 to 7/1)		180,000			86,000
Retained earnings, 1/1		(118,000	)		(168,000	)
Cash and receivables		154,000			62,000		$	62,000
Inventory		160,000			154,000			182,000
Patented technology (net)		256,000			196,000			204,000
Land		386,000			212,000			224,000
Buildings and equipment (net)		106,000			84,000			84,000
Liabilities		(520,000	)		(372,000	)		(340,000	)
Common stock		(300,000	)		(80,000	)
Additional paid-in capital		(11,400	)		(34,000	)

1)On its acquisition-date consolidated balance sheet, what amount should TruData report as common stock?

2)On its acquisition-date consolidated balance sheet, what amount should TruData report as retained earnings as of July 1?

Solutions

Expert Solution

1.)	Common Stock	$ 367,000	=300000+(13400*5)

2.)		Amount $
	Retained earnings 1/1, Tru data	118,000
	Add: Net profit of trudata from 1/1 to 7/1	112,600	(292,600 - 180,000 )
	Add: Share of subsidiary income from 1/1 to 7/1	54,000	(140,000 - 86,000 )
	Retained earnings as of July 1	284,600

ekkarill92 answered 1 year ago

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