On January 1, 2005, Myna Corporation issued 10,000 shares of its own $10 par val

Question

On January 1, 2005, Myna Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of Berry Corporation in an acquisition. Myna common stock at January 1, 2005 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows: Myna Berry Book Value Berry Book Value Fair Value Cash $ 25,000 $ 12,000 $ 12,000 Inventories 55,000 32,000 36,000 Other current assets 110,000 90,000 110,000 Land 100,000 30,000 90,000 Plant and equipment-net 660,000 250,000 375,000 $ 950,000 $ 414,000 $ 623,000 Liabilities $ 220,000 $ 50,000 $ 50,000 Capital stock, $10 par value 500,000 100,000 Additional paid-in capital 170,000 40,000 Retained earnings 60,000 224,000 $ 950,000 $ 414,000 Required: 1 . 2 Prepare a consolidated balance sheet for Myna Corporation and Subsidiary immediately after the business combination. On January 1, 2005, Myna Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of Berry Corporation in an acquisition. Myna common stock at January 1, 2005 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows: Myna Berry Book Value Berry Book Value Fair Value Cash $ 25,000 $ 12,000 $ 12,000 Inventories 55,000 32,000 36,000 Other current assets 110,000 90,000 110,000 Land 100,000 30,000 90,000 Plant and equipment-net 660,000 250,000 375,000 $ 950,000 $ 414,000 $ 623,000 Liabilities $ 220,000 $ 50,000 $ 50,000 Capital stock, $10 par value 500,000 100,000 Additional paid-in capital 170,000 40,000 Retained earnings 60,000 224,000 $ 950,000 $ 414,000 Required: 1 . 2 Prepare a consolidated balance sheet for Myna Corporation and Subsidiary immediately after the business combination.

Explanation / Answer

Consolidated Balance Sheet for Myna Corporation and Subsidiary (Post Business Combination) (All amounts in $) Myna Corporation Cash                         37,000 Inventories                         91,000 Other Current Assets                     2,20,000 Land                     1,90,000 Plant and Equipment = Net                   10,35,000                   15,73,000 Liabilities                     2,70,000 Capital, $ 10 par value                     6,00,000 Additional Paid-in Capital                     2,10,000 Retained Earnings                     4,93,000                   15,73,000 Capital will be equal to existing 500,000 (50,000 shares) plus additional 10,000 shares issued by Myna Corporation to its subsidiary Retained Earnings Consolidated Balance                     2,84,000 Difference in Fair Value and Book Value of Berry for Inventories                           4,000 Other current assets                         20,000 Land                         60,000 Plant and equipment-net                     1,25,000                     4,93,000

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