On January 1, 16, Brown Inc. acquired Larson Company’s net assets in exchange for Brown’s common stock
On January 1, 16, Brown Inc. acquired Larson Company’s net assets in exchange for Brown’s common stock with a par value of $100,000 and a fair value of $800,000. Brown also paid $10,000 in direct acquisition costs and $15,000 in stock issuance costs.
On this date, Larson’s condensed account balances showed the following:
Book Value | Fair Value | |
Current Assets | $280,000 | $370,000 |
Plant and Equipment | 440,000 | 480,000 |
Accumulated Depreciation | (100,000) | |
Intangibles – Patents | 80,000 | 120,000 |
Current Liabilities | (140,000) | (140,000) |
Long-Term Debt | (100,000) | (110,000) |
Common Stock | (200,000) | |
Other Paid-in Capital | (120,000) | |
Retained Earnings | (140,000) |
Required: Record Brown’s purchase of Larson Company’s net assets.