assighnment - 1 Grant Company has been looking to expand...

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1. Grant Company has been looking to expand its operations and has decided to acquire the assets of TURNER Company and MUURPHY Company. Grant Company will issue 25,000 shares of its $10 par common stock to acquire the net assets of Turner Company and will issue 12,000 shares to acquire the net assets of Murphy Company. The Balance sheet of the acquired companies (Combines) is as follows: Turner Company Murphy Company Assets: Accounts Receivables ........................................... 200,000 80,000 Inventory ............................................................. 150,000 85,000 Land ..................................................................... 150,000 50,000 Building ................................................................. 500,000 300,000 Accumulated Depreciation .................................... (150,000) (110,000) Total Assets ............................................................ 850,000 405,000 Liabilities and SH Equity Current Liabilities .................................................... 160,000 55,000 Bonds Payable ....................................................... 100,000 100,000 Common stock ($10 par) ........................................... 300,000 100,000 Retained earnings ..................................................... 290,000 150,000 Total Liabilities and Equity .......................................... 850,000 405,000 The following current fair values (CFV) are agreed upon by the BODs of the combines companies and Grant Company while the others have the same book values and current fair values: Turner Company Murphy Company Inventory .............................................................. 200,000 100,000 Land ...................................................................... 200,000 60,000 Building (net) ...................................................... . 400,000 350,000 Bonds Payable ....................................................... 80,000 95,000
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Grant's stock is currently traded at $ 40 per share. Grant will incur $ 5,000 direct acquisition cost in Turner Company and $ 4,000 is direct cost in Murphy Company. Grant also incurred $ 13,000 other indirect cost of acquisition and $ 15,000 registration and issue cost. Required: Record the acquisition cost on the books of Grant Company using purchase accounting principles (Purchase method) Checking Figures: Turner Company Murphy Company Total Acquisition Cost ................................... 1,005,000 484,000 Net Assets .................................................... 760,000 440,000 Good will ....................................................... 245,000 44,000 2.
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