Reference no: EM13373255
Presented below are the financial balances for the Atwood Company and the Franz Company as of December 31, 2009, immediately before Atwood acquired Franz. Also included are the fair values for Franz Company's net assets at that date.
Atwood Franz Co. Franz Co.
all amounts in
thousands
book value book value book value
Dec. 31 Dec. 31 Dec.31
2008 2008 2008
Cash $870 $240 $240
Receivables 660 600 600
Inventory 1,230 420 580
Land 1,800 260 250
Building (net) 1,800 540 650
Equipment (net) 660 380 400
Account payable ( 570) ( 240) ( 240)
accrued expenses( 270) ( 60) ( 60)
long-term liabilities(2,700) (1,020) (1,120)
common stock(20par) (1,980)
common stock(5par) ( 420)
additional paid in cap. (210) ( 180)
retained earnings (1,170) ( 480)
revenues (2,880) ( 660)
Expenses 2,760 620
Note: Parenthesis indicate a credit balance
Assume a business combination took place at December 31, 2009. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid. To settle a difference of opinion regarding Franz's fair value, Atwood promises to pay an additional $5.2 (in thousands) to the former owners if Franz's earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands).
12. Compute the investment cost at date of acquisition.
A. $1,760
B. $1,755
C. $1,750
D. $1,765
E. $1,120
13. Compute consolidated inventory at date of acquisition.
A. $1,650
B. $1,810
C. $1,230
D. $580
E. $1,830
14. Compute consolidated land at date of acquisition.
A. $2,060
B. $1,800
C. $260
D. $2,050
E. $2,070
15. Compute consolidated buildings (net) at date of acquisition.
A. $2,450
B. $2,340
C. $1,800
D. $650
E. $1,690
16. Compute consolidated goodwill at date of acquisition.
A. $455
B. $460
C. $450
D. $440
E. $465
17. Compute consolidated equipment at date of acquisition.
A. $400
B. $660
C. $1,060
D. $1,040
E. $1,050
18. Compute consolidated retained earnings as a result of this acquisition.
A. $1,160
B. $1,170
C. $1,265
D. $1,280
E. $1,650
19. Compute consolidated revenues at date of acquisition.
A. $3,540
B. $2,880
C. $1,170
D. $1,650
E. $4,050
20. Compute consolidated expenses at date of acquisition.
A. $2,760
B. $3,380
C. $2,770
D. $2,735
E. $2,785
Compute the consolidated cash upon completion of the acquisition.
A. $870
B. $1,110
C. $1,080
D. $1,085
E. $635