Question

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 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 goodwill 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.



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  • CreatedMarch 13, 2015
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