11) Samantha's Sporting Goods had net assets consisting of the following:
Book ValueFair Value
Building and Fixtures330,000 310,000
Pedic Incorporated purchased Samantha's Sporting Goods, and immediately dissolved Samantha's as a separate legal entity.
Requirement 1: If Samantha's was purchased for $1,000,000 cash, prepare the entry recorded by Pedic.
Requirement 2: If Samantha's was purchased for $1,500,000 cash, prepare the entry recorded by Pedic.
12) On January 2, 2010 Carolina Clothing issued 100,000 new shares of its $5 par value common stock valued at $19 a share for all of Dakota Dressing Company's outstanding common shares in an acquisition. Carolina paid $15,000 for registering and issuing securities and $10,000 for other direct costs of the business combination. The fair value and book value of Dakota's identifiable assets and liabilities were the same. Assume Dakota Company is dissolved on the date of the acquisition. Summarized balance sheet information for both companies just before the acquisition on January 2, 2010 is as follows:
Other current assets500,000500,000
Plant assets-net 4,000,000 1,500,000
Capital stock, $5 par2,000,000500,000
Additional paid-in capital1,000,000100,000
Retained Earnings 20,000 1,210,000
Total Liabilities & Equities$5,320,000$2,770,000