P$2-9$

Prepare allocation schedules under different stock price assumptions $($bargain

purchase$)$

Pop Corporation exchanged $40,000$ previously unissued no par common shares for a $40$ percent interest

in Son Corporation on January $1,2016.$ The assets and liabilities of Son on that date $($after the exchange$)$

were as follows $($in thousands$)$:

The direct cost of issuing the shares of stock was $$20,000,$ and other direct costs of combination were

$$80,000.$

REQUIRED

Assume that the January $1,2016,$ market price for Pop's shares is $$24$ per share. Prepare a schedule to

allocate the investment cost$/$book value differentials.

Assume that the January $1,2016,$ market price for Pop's shares is $$16$ per share. Prepare a schedule to

allocate the investment cost$/$book value differentials. Assume that other direct costs were $$0.$