Question

Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2020. To obtain these shares, Flynn pays $400 (in thousands) and issues 10,000 shares of $20 par value common stock on this date. Flynn's stock had a fair value of $36 per share on that date. Flynn also pays $15 (in thousands) to a local investment firm for arranging the transaction. An additional $10 (in thousands) was paid by Flynn in stock issuance costs.

The preacquisition book values for both Flynn and Macek as of January 1, 2020 follow. The fair value

of each of Flynn and Macek accounts is also included. In addition, Macek holds a fully amortized

trademark that still retains a $40 (in thousands) value. The figures below are in thousands. Any related

question also is in thousands.

Flynn, Inc		Macek Company
		Book Value	Fair Value
Cash	$  900	$ 80	$ 80
Receivables	480	180	160
Inventory	660	260	300
Land	300	120	130
Buildings (net)	1,200	220	280
Equipment	360	100	75
Accounts payable	480	60	60
Common stock	1,000	340
Additional paid in capital	1,200	80
Retained earnings	1,080	480

Required: Compute the amounts requested . All answers must be in thousands

1. What is the amount of goodwill?

2. What is the amount will be reported for consolidated receivables?

3. What amount will be reported for consolidated cash?

4. What amount will be reported for consolidated common stock?

5. What amount will be reported for consolidated additional paid-in capital?

Answer 1

		Amount $ ('000)
a.)
	Purchase consideration	760
	(400 + ( 10,000 x 0.036 ) )
	Less: Net assets at fair value	1,005
	( 80 + 160 + 300 + 130 + 280 + 75 - 60 + 40 )
	Goodwill/ ( Bagin power)	-245
b.)	Consolidated receivables	640	(480 + 160 )
c.)	Consolidated cash	555	( 900 + 80 - 400 - 15 - 10 )
d.)	Consolidated Common Stock	1,200	(1,000 + ( 10,000 x 0.020) )
e.)	Consolidated Additional paid in capital	1,350	(1,200 + ( 10,000 x 0.016) - 10 )