Octane Company and Bio Company have announced terms of an exchange agreement under which Octane will issue 10,000 shares of its $5 par value common stock to acquire all of Bio's assets.Octane shares are trading at $28,and Bio's $10 par value shares are trading at $15.Historical cost and fair value balance sheet data on January 1,2008,are as follows:

-Based on the information provided,what amount will be reported immediately following the business combination for Buildings and Equipment (net)in the combined company's balance sheet?

Question

Octane Company and Bio Company have announced terms of an exchange agreement under which Octane will issue 10,000 shares of its $5 par value common stock to acquire all of Bio's assets.Octane shares are trading at $28,and Bio's $10 par value shares are trading at $15.Historical cost and fair value balance sheet data on January 1,2008,are as follows:
 
-Based on the information provided,what amount will be reported immediately following the business combination for Buildings and Equipment (net)in the combined company's balance sheet?

Quizplus · Accepted Answer

The amount reported for Buildings and Equipment (net) in the combined company's balance sheet is typically the fair value of the assets acquired. In this case, $330,000 is likely the fair value determined for these assets.

Octane Company and Bio Company Have Announced Terms of an Exchange