Question & Answer: Bar Corporation has been looking to expand is operations and has decided to acquire the assets of Vicker Company and Kendal Com…..

Problem 1-2 aO3) Purchase of two companies with goodwill. Bar Corporation has been looking to expand is operations and has decided to acquire the assets of Vicker Company and Kendal Company. Bar will issue 30,000 shares of its $10 par common stock to net assets of Vicker and will issue 15,000 shares to acquire the net assets of Kendal cker and Kendal have the following balance sheets as of December 31, 2015 Vicker Assets $200,000 80,000 85,000 Accounts receivable Propery,plant, ond equipment ...150,000 50,000 300,000 Land (150,000 (110,000) Total ossets .. Chapoer1 BuSINESS COMEUTIONS Ni RILIS FOR A LONG-STANDING BUSINESS PIRACTc Liobilities and Equity Vicker Kendol Bonds payable Stockholders equily Stockholders equity: .100,000 100,000 100,000 290,000 150,000 300,000 Retoined earnings Total liabillies and equity $850,000 $405,000 The following fair values are agreed upon by the firms Assets Vicker Kendal .. $190,000 $100000 450,000 90,000 80,000 400,000 95,000 Bonds payable Bars stock is currently trading at $40 per share. Bar will incur $5,000 of aoquisition costs in acquiring Vicker and $4,000 of acquisition costs in acquiring Kendal. Bar will also incur $15,000 of registration and issuance costs for the shares issued in both acquisitions Bars stockholders equity is as follows Poid-in copital in excess of par..800,000 750,000 Record de aquisitions on the books of Bar Corporation. Value analysis is suggested to guide Required your work

Bar Corporation has been looking to expand is operations and has decided to acquire the assets of Vicker Company and Kendal Company. Bar will issue 30,000 shares of its $10 par common stock to acquire the net assets of Vicker Company and will issue 15,000 shares to acquire the net assets of Kendal Company. Vicker and Kendal have the following balance sheets as of December 31, 2015: The following fair values are agreed upon by the firms: Bar’s stock is currently trading at $40 per share. Bar will incur $5,000 of acquisition costs in acquiring Vicker and $4,000 of acquisition costs in acquiring Kendal. Bar will also incur $15,000 of registration and issuance costs for the shares issued in both acquisitions. Bar’s stockholders’ equity is as follows: Record the acquisitions on the books of Bar Corporation. Value analysis is suggested to guide Required your work.

Expert Answer

Solution:-

Value Analysis
Particulars	Vicker	Kendal
Account Receivable	200000	80000
Inventory	190000	100000
Land	300000	80000
Building	450000	400000

Total Assets	1140000	660000

Current Liabilities	160000	55000
Bonds Payable	90000	95000
Total Liabilities	250000	150000

Net Assets Acquired	890000	510000

Consideration Paid for Acquisition	1200000	600000
	(30000*40)	(15000*40)

Goodwill Amount	310000	90000

Recording of Acquisiton Entries

1. Assets of Vicker Inc A/c Dr $1140000

Assets of Kendal Inc A/c Dr $660000

Goodwill A/c Dr $400000

To Liabilities of Vicker Inc A/c $250000

To Liabilities of Kendal Inc A/c $150000

To Common Stock Issued to Vicker Inc A/c $1200000

To Common Stock Issued to Kendal Inc A/c $600000

(Being Acquisition has been booked and the excess amount paid has been booked as Goodwill)

2. Acquisition Expenses A/c Dr 24000

To Cash A/C $24000

Still stressed from student homework?

Get quality assistance from academic writers!

Order now