On January 1, 2010, Platz Company acquired all the net assets of Satz Company by issuing 75,000 shares of its $10 par value common stock to the stockholders of Satz Company During negotiations Platz Company agreed to issue additional shares of common stock to the stockholders of Satz if the average...

The amount of the contingency is 500000 10000 shares at 50 per share Part ...

On January 1, 2010, Platz Company acquired all the net assets of Satz Company by issuing 75,000

Question:

On January 1, 2010, Platz Company acquired all the net assets of Satz Company by issuing 75,000 shares of its $10 to the stockholders of Satz Company. During negotiations Platz Company agreed to issue additional shares of to the stockholders of Satz if the average postcombination earnings over the next three years equaled or exceeded $2,500,000. On January 1, 2010 the market value of Platz stock was= $50 per share. Based on the information available at the acquisition date, the additional 10,000 shares are expected to be issued.

Required:
A. Prepare the journal entry on Platz Company’s books on January 1, 2010. It is expected that the earnings target is likely to be met. Platz Company records on acquisition.
B. Prepare the journal entry on Platz Company’s books on January 1, 2014, when the additional shares are issued. On this date the market value of Platz stock is valued at $60 per share.

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...