Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,000 shares of its $10 par value common stock to acquire all of Staple Company's assets.

 Palm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 8,000 shares of its $10 par value common stock to acquire all of Staple Company's assets. Palm shares currently are trading at $50, and Staple $5 par value shares are trading at $18 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows:


Required:
What amount will be reported immediately following the business combination for each of the following items in the combined company's balance sheet?

 

Explanation
Stock Outstanding: $200,000 + ($10 × 8,000 shares) = $280,000
Cash and Receivables: $150,000 + $40,000 = $190,000
Land: $100,000 + $85,000 = $185,000
Buildings and Equipment (net): $300,000 + $230,000 = $530,000
Goodwill: ($50 × 8,000) − $355,000 = $45,000
Additional Paid-In Capital: $20,000 + [($50 − $10) × 8,000] = $340,000