Bullen Inc. acquired 100% of the
voting common stock of Vicker Inc. on January 1, 20X1. The book value and fair
value of Vicker's accounts on that date (prior to creating the combination)
follow, along with the book value of Bullen's accounts: Bullen Book Value Vicker
Book Value Vicker Fair Value Retained Earnings 1/1/X1 $250,000 $240,000 Cash
and Receivables 170,000 70,000 $70,000 Inventory 230,000 170,000 210,000 Land
280,000 220,000 240,000 Buildings (net) 480,000 240,000 270,000 Equipment (net
120,000 90,000 90,000 Liabilities 650,000 430,000 420,000 Common stock 360,000
80,000 Aditional paid-in capital 20,000 40,000 Assume that Bullen paid a total
of $480,000 in cash for all of the shares of Vicker. In addition, Bullen paid
$35,000 for secretarial and management time allocated to the acquisition
transaction. What will be the balance in consolidated goodwill? A. $0. B.
$20,000. C. $35,000. D. $55,000. E. $65,000.
How are stock issuance costs and
direct combination costs treated in a business combination which is accounted
for as an acquisition when the subsidiary will retain its incorporation?
Stock issuance costs are a part of
the acquisition costs, and the direct combination costs are expensed
Direct combination costs are a part
of the acquisition costs, and the stock issuance costs are a reduction to
additional paid-in capital.
Direct combination costs are
expended and stock issuance costs are a reduction to additional paid-in capital
Both are treated as part of the
acquisition consideration transferred
Both treated as a reduction to
additional paid in capital