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Homework answers / question archive / Elm Corporation and Maple Company have announced terms of an exchange agreement under which Elm will issue 8,000 shares of its $10 par value common stock to acquire all of Maple Company’s assets

Elm Corporation and Maple Company have announced terms of an exchange agreement under which Elm will issue 8,000 shares of its $10 par value common stock to acquire all of Maple Company’s assets

Accounting

Elm Corporation and Maple Company have announced terms of an exchange agreement under which Elm will issue 8,000 shares of its $10 par value common stock to acquire all of Maple Company’s assets.  Elm shares currently are trading at $50, and Maple $5 par value shares are trading at $18 each.  Historical cost and fair value balance sheet data on January 1, 2012, are as follows:

 

 

Elm Corporation

 

Maple Company

 

Balance Sheet Item

Book Value

Fair Value

 

Book Value

Fair Value

 

Cash & Receivables

$150,000

 

$150,000

 

$40,000

 

$40,000

 

Land

100,000

 

170,000

 

50,000

 

85,000

 

Buildings & Equipment (net)

300,000

 

400,000

 

160,000

 

230,000

 

Total Assets

$550,000

 

$720,000

 

$250,000

 

 $ 355,000

 

 

             

 

Common Stock

$200,000

     

$100,000

   

 

Additional Paid-In Capital

20,000

     

10,000

   

 

Retained Earnings

330,000

     

140,000

   

 

Total Equities

$550,000

     

$250,000

   

 

 

 

 

 

 

 

 

 

 

 

What amount will be reported immediately following the business combination for each of the following items in the combined company’s balance sheet?

Option 1

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