Question

Glen Co. acquires 100 percent of the outstanding voting shares of Nutley Company on January 1, 2021. To obtain these shares, Glen pays $400 cash (in thousands) and issues 10,000 shares of $20 par value common stock on this date. Glen's stock had a fair value of $36 per share on that date. Glen also pays $15 (in thousands) to a local investment firm for arranging the acquisition. An additional $10 (in thousands) was paid by Glen in stock issuance costs. The book values for both Glen and Nutley immediately preceding the acquisition follow. The fair value of each of Glen and Nutley accounts is also included. In addition, Nutley 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.

	GLEN CO.				NUTLEY 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
LONG-TERM LIABILITIES		1,140				340				300
COMMON STOCK		1,000				80
ADDITIONAL PAID-IN CAPITAL		200				0
RETAINED EARNINGS		1,080				480

1)  What amount will be reported for goodwill as a result of this acquisition?

2)  What amount will be reported for consolidated additional paid-in capital?

3) What amount will be reported for consolidated cash after the acquisition is completed?

Answer 1

Solution:

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