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Question: on january 1 richard company acquired all the net assets...

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On January 1, Richard Company acquired all the net assets of Ulmer Company by issuing debt with a market value of $350,000 and a payment of cash of $300,000. The fair value of Ulmer's identifiable net assets equaled their book values except for buildings and equipment which had a fair value of $120,000 greater than book value. Balance sheets for the two companies immediately preceding the acquisition were as follows:

Richard Co. Ulmer Co.
Cash

$400,000

$150,000

Building & Equipment

700,000

400,000

Accumulated Depreciation

(300,000)

(150,000)

Other Identifiable Assets

100,000

200,000

Total Assets

$900,000

$600,000

Liabilities

$200,000

$100,000

Common Stock

400,000

300,000

Additional Paid-in Capital

160,000

100,000

Retained Earnings

140,000

100,000

Total Liabilities and Equity

$900,000

$600,000

The dollar balance of the gross amount (i.e. without accumulated depreciation) in the Buildings & Equipment account on the balance sheet of the combined companies immediately following the merger should be:

1.

$1,100,000

2.

$1,220,000

3.

$1,070,000

4.

$1,090,000

5.

None of the above

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