On January 1, Pan Corporation pays S 400,000 cash and also issues 36,000 shares of $ 10 par common stock with a

for all the outstanding common shares of Sis Corporation. In addition, Pan pays $ 60.000 for registering and issuing
140.000 for the other direct costs of the business combination, in which Sis Corporation is dissolved. Summary bala
the companies immediately before the merger is as follows :

Pan Book Sis Book Sis Fair

Value Value Value

Cash $ 700,000 $ 80,000 $ 80,000

Inventories $ 240,000 $ 160,000 $ 200,000
Other currents assets $ 60,000 $ 40,000 $ 40,000
Plant assets-net $ 520,000 $ 360,000 $ 560,000
Total assets $ 1,520,000 $ 640,000 $ 880,000
Current liabilities $ 320,000 $ 60,000 $ 60,000
Other liabilities $ 160,000 $ 100,000 $ 80,000
Common stock, Rp. 10.000 $ 840,000 $ 400,000
Retained earnings $ 200,000 $ 80,000
Total liabilities and owners equity $ 1,520,000 $ 640,000

R E Q U I R E D : Prepare all journal entries on Pan’s books to account for the acquisition.

Investment in Sis $ 1,060,000

Common Stock $ 360,000
Additional paid-in capital $ 700,000

Investment expense $ 140,000

Additional PIC $ 60,000
Cash $ 200,000

Cash $ 80,000
Inventory $ 200,000
Other current asset $ 40,000
Plant assets $ 560,000
Goodwill $ 320,000
Current liabilities $ 60,000
Other liabilities $ 80,000
Investment in Sis $ 1,060,000
0 par common stock with a market value of $ 660,000
0 for registering and issuing the 36.000 shares and $
is dissolved. Summary balance sheet information for
Comparative balance sheets for Pin and San Corporations at December 31, 2014, are as follows:

Pin San
Current assets $ 520,000 $ 240,000
Land $ 200,000 $ 400,000
Buildings-net $ 1,200,000 $ 400,000
Equipment-net $ 880,000 $ 960,000
Total assets $ 2,800,000 $ 2,000,000
Current liabilities $ 200,000 $ 240,000
Capital stock, $10 par $ 2,000,000 $ 800,000
Additional PIC $ 200,000 $ 560,000
Retained earnings $ 400,000 $ 400,000
Total equities $ 2,800,000 $ 2,000,000

On January 2, 2015, Pin issues 60,000 shares of its stock with a market value of $ 40 per share for all the
outstanding shares of San Corporation in an acquisition. San is dissolved. The recorded book values
reflect fair values, except for the buildings of Pin, which have a fair value of $ 1.600,000, and the current
assets of San, which have a fair value of $ 400,000. Pin pays the following expenses in connection with
the business combination :

Costs of registering and issuing securities $ 60,000

Other direct costs of combination $ 100,000

R E Q U I R E D : Prepare the balance sheet of Pin Corporation immediately after the acquisition.

Preliminary computations
Fair Value: Cost of investment in San at January 2 $ 2,400,000
Book value of net assets $ 1,760,000
Excess fair value over book value $ 640,000

Excess assigned to:

Current assets $160,000 $ 160,000
Remainder to goodwill 480,000 $ 480,000
Excess fair value over book value $ 640,000

Pin Corporation
Balance Sheet at January 2, 2015

Assets
Current assets $ 760,000
Land $ 600,000
Buildings-net $ 1,600,000
Equipment-net $ 1,840,000
Goodwill $ 480,000
Total assets $ 5,280,000

Liabilities and Stockholders' Equity

Current liabilities $ 440,000
Capital stock, $10 par $ 2,600,000
Additional paid-in capital $ 1,940,000
Retained earnings $ 300,000
Total liabilities and stockholders' equity $ 5,280,000
are as follows:

40 per share for all the

orded book values
00,000, and the current
es in connection with

he acquisition.

Total assets fair value san $ 2,160,000

Total Liabilities $ 240,000
Net Assets $ 1,920,000
Issues shorts stock $ 2,400,000
Net Assets (equity) $ 1,920,000
$ 480,000
On January 2, 2015, Pet Corporation enters into a business combination with Sea Corporation in which
Sea is dissolved. Pet pays $ 1,650,000 for Sea, the consideration consisting of 66,000 shares of Pet $ 10,
par common stock with a market value of $ 25 per share. In addition, Pet pays the following expenses in
cash at the time of the merger:

Finder's fee
Accounting and legal fees
Registration and issuance costs of security

Balance sheet and fair value information for the two companies on December 31, 2014, immediately
before the merger, is as follows .

Pat Book Sea Book Sea Fair

Value Value Value
Cash $ 300,000 $ 60,000 $ 60,000
Accounts receivable-net $ 460,000 $ 100,000 $ 80,000
Inventories $ 1,040,000 $ 160,000 $ 240,000
Land $ 800,000 $ 200,000 $ 300,000
Buildings-net $ 2,000,000 $ 400,000 $ 600,000
Equipment-net $ 1,000,000 $ 600,000 $ 500,000
Total assets $ 5,600,000 $ 1,520,000 $ 1,780,000
Accounts payable $ 600,000 $ 80,000 $ 80,000
Note payable $ 1,200,000 $ 400,000 $ 360,000
Capital stock, $ 10 par $ 1,600,000 $ 600,000
Other PIC $ 1,200,000 $ 100,000
Retained earnings $ 1,000,000 $ 340,000
Total liabilities and owners' equity $ 5,600,000 $ 1,520,000 $ 440,000

R E Q U I R E D : Prepare a balance sheet for Pet Corporation as of January 2, 2015 immediately after the merger,
assuming the merger is treated as an acquisition

Preliminary computations
Fair Value: Cost of acquiring Sea $ 1,650,000
Fair value of assets acquired and liabilities assumed $ 1,340,000
Goodwill from acquisition of Sea $ 310,000

Pet Corporation
Balance Sheet
at January 2, 2015

Assets
Current assets
Cash $ 80,000
Accounts receivable-net $ 540,000
Inventories $ 1,280,000
Plant assets
Land $ 1,100,000
Buildings-net $ 2,600,000
Equipment-net $ 1,500,000
Goodwill $ 310,000
Total assets $ 7,410,000

Liabilities and Stockholders' Equity

Liabilities
Accounts payable $ 680,000
Note payable $ 1,560,000
Stockholder's equity
Capital stock, $ 10 par $ 2,260,000
Other paid-in capital $ 2,110,000
Retained earnings $ 800,000
Total liabilities and stockholders' equity $ 7,410,000
a Corporation in which
,000 shares of Pet $ 10,
he following expenses in

$ 70,000
$ 130,000
$ 80,000
$ 280,000

1, 2014, immediately

15 immediately after the merger,

 On January 2, 2015, Par Corporation issues its own $ 10,000 par common stock for all the outstanding
stock of Sin Corporation in an acquisition. Sin is dissolved. In addition, Par pays $ 40,000,000 for
registering and issuing securities and $ 60,000,000 for other costs of combination. The market price of
Par’s stock on January 2, 2015, is $ 60,000 per share. Relevant balance sheet information for Par and Sin
Corporations on December 31, 2014, just before the combination, is as follows :

Par Sin Sin Fair

Historical Cost Historical Cost vale

Cash $ 240,000 $ 20,000 $ 20,000

Inventories $ 100,000 $ 60,000 $ 120,000
Other current assets $ 200,000 $ 180,000 $ 200,000
Land $ 160,000 $ 40,000 $ 200,000
Plant and equipment--net $ 1,300,000 $ 400,000 $ 700,000
Total assets $ 2,000,000 $ 700,000 $ 1,240,000
Liabilities $ 400,000 $ 100,000 $ 100,000
Capital stock, $ 10 par $ 1,000,000 $ 200,000
Additional PIC $ 400,000 $ 100,000
Retained earnings $ 200,000 $ 300,000
Total liabilities and owners' equity $ 2,000,000 $ 700,000

REQUIRED
1. Assume that Par issues 25,000 shares of its stock for all of Sin’s outstanding shares.
a. Prepare journal entries to record the acquisition of Sin.
b. Prepare a balance sheet for Par Corporation immediately after the acquisition

a Investment in Sin $ 1,500,000

Common stock $ 250,000
Additional paid-in capital $ 1,250,000

Investment expense $ 60,000

Additional PIC $ 40,000
Cash $ 100,000

Cash $ 20,000
Inventory $ 120,000
Other current asset $ 200,000
Land $ 200,000
Plant & Equipment assets $ 700,000
Goodwill $ 360,000
Current liabilities $ 100,000
Investment in Sin $ 1,500,000

b Par Corporation
 Balance Sheet
January 2, 2015
(after business combination)

Assets
Cash $ 160,000
Inventories $ 220,000
Other current assets $ 400,000
Land $ 360,000
Plant and equipment-net $ 2,000,000
Goodwill $ 360,000
Total assets $ 3,500,000

Liabilities and Stockholders' equity

Liabilities $ 500,000
Capital stock, $10 par $ 1,250,000
Additional PIC $ 1,610,000
Retained earnings $ 140,000
Total liabilities and stockholders' equity $ 3,500,000

2. Assume that Par issues 15,000 shares of its stock for all of Sin’s outstanding shares.
a. Prepare journal entries to record the acquisition of Sin.
b. Prepare a balance sheet for Par Corporation immediately after the acquisition.

a Investment in Sin $ 900,000

Common stock $ 150,000
Additional paid-in capital $ 750,000

Investment expense $ 60,000

Additional PIC $ 40,000
Cash $ 100,000

Cash $ 20,000
Inventory $ 120,000
Other current asset $ 200,000
Land $ 200,000
Plant & Equipment assets $ 700,000
Current liabilities $ 100,000
Investment in Sin $ 900,000
Gain from bargain purchase $ 240,000

b Par Corporation
Balance Sheet
January 2, 2015
 (after business combination)

Assets
Cash $ 160,000
Inventories $ 220,000
Other current assets $ 400,000
Land $ 360,000
Plant and equipment-net $ 2,000,000
Total assets $ 3,140,000

Liabilities and Stockholders' equity

Liabilities $ 500,000
Capital stock, $10 par $ 1,150,000
Additional PIC $ 1,110,000
Retained earnings $ 380,000
Total liabilities and stockholders' equity $ 3,140,000
the outstanding

market price of
tion for Par and Sin