Using the following information , answer the following in a Word document:
P Corporation acquired 100 percent of S Company’s assets on January 1, 2011, by issuing 1,250,000 shares of its $1 par common stock. The common stock issue in the acquisition had a market value of $80.80 per share. Balance sheets of both companies immediately prior to the acquisition are shown below.
P Corporation
Balance Sheet
December 31, 2010
Assets
Cash $120,000,000
Accounts receivable $350,000,000
Inventories $135,000,000
Land $15,000,000
Plant, property, and equipment $80,000,000
Less: Accumulated depreciation ($42,000,000)
Total assets $658,000,000
Liabilities and Shareholders’ Equity
Accounts payable $215,000,000
Notes payable $85,000,000
Common stock $100,000,000
Paid-in capital in excess of par $157,000,000
Retained earnings $101,000,000
Total liabilities and SE $658,000,000
S Company
Balance Sheet
December 31, 2010
Assets
Cash $50,000,000
Accounts receivable $37,000,000
Inventories $18,000,000
Land $10,000,000
Plant, property, and equipment $35,000,000
Less: Accumulated depreciation ($21,000,000)
Total assets $129,000,000
Liabilities and Shareholders’ Equity
Accounts payable $32,000,000
Notes payable $8,000,000
Common stock $10,000,000
Paid-in capital in excess of par $28,000,000
Retained earnings $51,000,000
Total liabilities and SE $129,000,000