Module 6-2

Quiz

Question # 8

The financial balances for the Atwood Company and the Franz Company as of December 31, 2013, are presented below. Also included are the fair value for the Franz Company's net assets.

Atwood Franz Co. Franz Co.

(All numbers are in thousands)

Book Value Book Value Fair Value

12/31/2013 12/31/2013 12/31/2013

Cash $ 870 $ 240 $ 240

Receivables 660600 600

Inventory 1,230 420 580

Building(net) 1,800 260 250

Equipment(net)1,800540 650

Account Payable 660 380 400

Accuredexpenses(570) (240)(240)

Long term liabilities(2700)(1020) (1120)

Common stock($20 par)(1980)

Common stock($5 par) (420)

Additional Paid- in capital(210) (180)

Retained earnings(1170)(480)

Revenues (2880) (660)

Expenses 2760 60

Note: Parentheses indicate a credit balance.

Assume an acquisition business combination took place at December 31, 2013. Atwood issued 50 shares of its common stock with a fair value of 35 per share for all of the outstanding commonshares of Franz. Stock issuance cost of $ 15 (in thousands) and direct costs of $ 10 (in thousands) were paid.

Compute consolidated long-term liabilities at the date of the acquisition.

0 $ 2,700

0 $ 2,800

0 $ 3,720

0 $ 3,820

0 $ 2,600