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Homework answers / question archive / On July 1, 2012, Alan Enterprises merged with Terry Corporation through an exchange of stock and the subsequent liquidation of Terry
On July 1, 2012, Alan Enterprises merged with Terry Corporation through an exchange of stock and the subsequent liquidation of Terry. Alan issued 220,000 shares of its stock to affect the combination. The book values of Terry’s assets and liabilities were equal to their fair values at the date of combination, and the value of the shares exchanged was equal to Cherry’s book value. Information relating to income for the companies is as follows:
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2011 |
Jan. 1–June 30, 2012 |
July 1–Dec. 31, 2012 |
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Net Income: |
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Alan Enterprises |
$ |
4,620,000 |
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$ |
2,510,000 |
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$ |
3,608,000 |
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Terry Corporation |
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1,350,000 |
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722,000 |
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— |
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Alan Enterprises had 1,200,000 shares of stock outstanding prior to the combination. Remember that when calculating earnings per share (EPS) for the year of the combination, the shares issued in the combination were not outstanding for the entire year.
Required:
Compute the net income and earnings-per-share amounts that would be reported in Alan's 2012 comparative income statements for both 2012 and 2011. (Round earnings per share to 2 decimal places.)
