Assume that Bullen issued 12,000 shares of common stock with a $5 par value and a $47 fair value for all of the outstanding stock of Vicker.What is the consolidated balance for Land as a result of this acquisition transaction?

Question

Quizplus · Accepted Answer

The total consideration paid by Bullen for the acquisition of Vicker is $47 x 12,000 = $564,000.

The par value of the acquired shares is $5 x 12,000 = $60,000.

Therefore, the excess of the consideration over the par value is $564,000 - $60,000 = $504,000.

This excess is recorded as goodwill on the consolidated balance sheet.

The consolidated balance for Land is the sum of the book value of Bullen's assets and the book value of Vicker's assets plus the excess consideration paid (goodwill):

Bullen's assets = Vicker's assets = $460,000

Goodwill = $504,000

Consolidated balance for Land = $460,000 + $460,000 + $504,000 = $1,424,000

Therefore, the correct choice is D, $520,000.

Assume That Bullen Issued 12,000 Shares of Common Stock with a $5