Problem: Hill buys Loring on 7/1 for $400,000 by issuing 10,000 of $5 par, $40 fair value shares to Loring’s existing shareholders.
|
In thousands
|
Hill Pre-
Acquisition
|
Loring
BV
|
Loring
FV
|
|
|
|
|
|
|
Cash and receivables
|
140
|
60
|
60
|
|
Inventory
|
190
|
145
|
175
|
|
Patented Technology
|
230
|
180
|
200
|
|
Land
|
400
|
200
|
225
|
|
Buildings
|
100
|
75
|
75
|
|
|
|
|
|
|
Total Assets
|
$ 1,060
|
$ 660
|
|
|
|
|
|
|
|
Liabilities
|
(540)
|
(360)
|
(350)
|
|
Common Stock
|
(300)
|
(70)
|
|
|
APIC
|
(10)
|
(30)
|
|
|
Retained Earnings, 7/1
|
(210)
|
(200)
|
|
|
Total Liab. And OE
|
$ (1,060)
|
$ (660)
|
|
Required:
1) Calculate FVINA for this example.
2) Optional: Prepare an allocation schedule.
3) Definition of Goodwill = Purchase Price less ____________ .
4) Calculate Goodwill for this example.
5) Prepare Hill’s journal entry to acquire Loring assuming acquisition of stock with no dissolution.
6) What will be the balances in Hill’s Owners’ Equity accounts after the acquisition?
7) Prepare the elimination entries.