The December 31, 2011 abridged balance sheets for Evenhat Company and Larst Company on December 31, 2011 are given below:
Evenhat Company
Larst Company
Current assets $ 260,000 $ 120,000
Land 100,000 200,000
Buildings – net 600,000 200,000
Equipment – net 440,000 480,000
Total assets 1,400,000 1,000,000
Current liabilities 100,000 120,000
Common stock 100,000 80,000
Additional paid-in capital 1,000,000 600,000
Retained earnings 200,000 200,000
Total claims 1,400,000 1,000,000
On January 1, 2012 Evenhat issued 50,000 shares with a fair value of $24 per share for all the outstanding shares of Larst. Larst continued to exist as a separate legal entity. The fair value of the assets and liabilities of Larst are equal to their book value except for the land (fair value of $300,000), buildings (fair value of $250,000) and equipment (fair value of $600,000).
Evenhat pays cash for the following costs in connection with the combination:
Registering and issuing its shares $ 30,000
Other direct costs 50,000.
Required:
Complete steps 1 to 5 of the consolidation process in connection with the Evenhat and Larst combination.