On January 1,2016,Prima Company issued 1,500 of its $20 par value common shares with a fair value of $50 per share in exchange for 2,000 outstanding common shares of Swatch Company in a purchase transaction.Registration costs amounted to $1,700 paid in cash.Just prior to the acquisition,the balance sheets of the two companies were as follows:
Any differences between the book value of equity and the value implied by the purchase price relates to Land.
Required:
A.Prepare the journal entry on Prima's books to record the exchange of stock.
B.Prepare a Computation and Allocation Schedule for the Difference between book value and value implied by the purchase price.
C.Calculate the consolidated balance for each of the following accounts as of December 31,2016:
1.Cash
2.Land
3.Common Stock
4.Other Contributed Capital

Question

On January 1,2016,Prima Company issued 1,500 of its $20 par value common shares with a fair value of $50 per share in exchange for 2,000 outstanding common shares of Swatch Company in a purchase transaction.Registration costs amounted to $1,700 paid in cash.Just prior to the acquisition,the balance sheets of the two companies were as follows:
  Any differences between the book value of equity and the value implied by the purchase price relates to Land.
Required:
A.Prepare the journal entry on Prima's books to record the exchange of stock.
B.Prepare a Computation and Allocation Schedule for the Difference between book value and value implied by the purchase price.
C.Calculate the consolidated balance for each of the following accounts as of December 31,2016:
1.Cash
2.Land
3.Common Stock
4.Other Contributed Capital

Quizplus · Accepted Answer

The Answer of On January 1,2016,Prima Company issued 1,500 of its $20 par value common shares with a fair value of $50 per share in exchange for 2,000 outstanding common shares of Swatch Company in a purchase transaction.Registration costs amounted to $1,700 paid in cash.Just prior to the acquisition,the balance sheets of the two companies were as follows:
  Any differences between the book value of equity and the value implied by the purchase price relates to Land.
Required:
A.Prepare the journal entry on Prima's books to record the exchange of stock.
B.Prepare a Computation and Allocation Schedule for the Difference between book value and value implied by the purchase price.
C.Calculate the consolidated balance for each of the following accounts as of December 31,2016:
1.Cash
2.Land
3.Common Stock
4.Other Contributed Capital

On January 1,2016,Prima Company Issued 1,500 of Its $20 Par