On July 1, TruData Company issues 10,000 shares of its common stock with a $5 par value
Question:
On July 1, TruData Company issues 10,000 shares of its common stock with a $5 par value and a $40 fair value in exchange for all of Webstat Company's outstanding voting shares. Webstat's pre-combination book and fair values are shown below along with book values for TruData's accounts.
| True Data Book Values | Webstat Book Values | Webstat Fair Values | |
| Revenues (1/1 to 7/1) | $(255,800) | $(134,000) | |
| Expenses (1/1 to 7/1) | 160,000 | 80,000 | |
| Retained earnings, 1/1 | (124,000) | (168,000) | |
| Cash and receivables | 142,000 | 80,000 | $80,000 |
| Inventory | 176,000 | 152,000 | 174,000 |
| Patented technology(net) | 254,000 | 180,000 | 204,000 |
| Land | 404,000 | 204,000 | 228,000 |
| Buildings and equipment (net) | 88,000 | 88,000 | 88,000 |
| Liabilities | (530,000) | (378,000) | (352,000) |
| Common Stock | (300,000) | (70,000) | |
| Additional paid-in capital | (10,000) | (30,000) | |
A. On its acquisition-date consolidated balance sheet, what amount should TruData report as goodwill?
B. On its acquisition-date consolidated balance sheet, what amount should TruData report as patented technology (net)?
C. On its acquisition-date consolidated balance sheet, what amount should TruData report as common stock?
D. On its acquisition-date consolidated balance sheet, what amount should TruData report as retained earnings as of July 1?
Expert Answer:
Fundamentals of Advanced Accounting
ISBN: 978-1259722639
7th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
