Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

Exercise 34

Purchase of two companies with goodwill. Bar Corporation has been looking to expand its 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, 2011:
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:
Common stock ($10 par)........................ $1,200,000
Paid-in capital in excess of par................... 800,000
Retained earnings............................. 750,000
Record the acquisitions on the books of Bar Corporation. Value analysis is suggested to guide your work.