Module 6-2 Quiz Question # 8 The financial balances for the Atwood Company and the Franz Company as of December 31, 2013, are presented below.

C-690 Module 6-2 Quiz Question #9 Which of the following statements is true regarding the acquisition method of accounting for a business combination?
June 28, 2019
ACC 690 Milestone Two Guidelines and Rubric Overview: The final project for this course is the creation of a portfolio consisting of a report
June 28, 2019

Module 6-2

Quiz

Question # 8

The financial balances for the Atwood Company and the Franz Company as of December 31, 2013, are presented below. Also included are the fair value for the Franz Company’s net assets.

                                                                    Atwood                           Franz Co.                                        Franz Co.

                                                                                             (All numbers are in thousands)

                                                                   Book Value                           Book Value                               Fair Value

                                                                  12/31/2013                            12/31/2013                               1 2/31/2013

 Cash                                                             $ 870                                  $ 240                                        $ 240

 Receivables                                                    660                                     600                                           600

 Inventory                                                       1,230                                     420                                           580       

 Building(net)                                                 1,800                                     260                                           250

 Equipment(net)                                            1,800                                     540                                           650

 Account Payable                                            660                                     380                                           400    

 Accured expenses                                        (570)                                   (240)                                        (240)

 Long term liabilities                                     (2700)                                 (1020)                                        (1120)

 Common stock($20 par)                            (1980)

 Common stock($5 par)                                                                             (420)    

 Additional Paid- in capital                            (210)                                     (180)

 Retained earnings                                       (1170)                                    (480)  

 Revenues                                                    (2880)                                    (660)

 Expenses                                                      2760                                        60

 Note: Parentheses indicate a credit balance.

 Assume an acquisition business combination took place at December 31, 2013. Atwood issued 50 shares of its common stock with a fair value of 35 per share for all of the outstanding common shares of Franz. Stock issuance cost of $ 15 (in thousands) and direct costs of $ 10 (in thousands) were paid.

 Compute consolidated long-term liabilities  at the date of the acquisition.

 0 $ 2,700

 0 $ 2,800

 0 $ 3,720

 0 $ 3,820

 0 $ 2,600

 
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