PVN Corporation acquired all of the stock of SFC Corporation by issuing 1,000,000 shares of no-par stock
Question:
PVN Corporation acquired all of the stock of SFC Corporation by issuing 1,000,000 shares of no-par stock with a market value of $40 per share. Registration fees were $500,000 and legal fees were $300,000, all paid in cash. SFC's book value at the date of acquisition was $8,000,000. At the date of acquisition, all of SFC's assets and liabilities were reported at amounts approximating fair value, except that its plant and equipment was overvalued by $10,000,000. SFC also had unreported identifiable intangible assets valued at $15,000,000, and unreported warranty liabilities of $4,000,000. A deferred tax liability valued at $2 million was reported in consolidation at the date of acquisition.
Eliminating entry (R) reduces Investment in SFC by:
A. | $32,300,000 | |
B. | $32,000,000 | |
C. | $40,000,000 | |
D. | $32,800,000 |
Introduction to Derivatives and Risk Management
ISBN: 978-1305104969
10th edition
Authors: Don M. Chance