On December 31, 20X6, the statements of financial position of Bee Ltd. and See Corp. are as follows:

Bee Ltd. has 100,000 common shares outstanding, and See Corp. has 45,000 shares outstanding. On January 1, 20X7, Bee Ltd. issues an additional 90,000 common shares to See Corp. at $ 90 per share in return for all of the assets and liabilities of that company. See Corp. distributes Bee Ltd.’ s common shares to its shareholders in return for their outstanding common shares, and ceases to exist as a separate legal entity. At the time of this transaction, the cash, accounts receivable, inventories, and current liabilities of both companies have fair values equal to their carrying values. The plant and equipment and long- term liabilities have fair values as follows:

1. What is the amount of goodwill that would be recorded for this business combination?
2. In completing the fair value increment allocation, what other intangible assets could potentially exist that a value could be allocated to instead of (or in addition to) goodwill?
3. Prepare an SFP at January 1, 20X7, for Bee Ltd. after thepurchase.

  • CreatedMarch 13, 2015
  • Files Included
Post your question