60.1K

Verified Solution

Link Copied!

On January 2, 2019, Birch Corporation issued 35,000 of its own $10 par common stock for all of the outstanding stock of Tree Corporation in an acquisition. Tree is dissolved. Additionally, Birch pays $50,000 for registration fees associated with the stock issuance, and $75,000 for other expenses related to the acquisition. The market price of Birch's stock on January 2, 2019 is $50 per share. Relevant balance sheet information for Birch and Tree Corporations on December 31, 2018 just before the combination is as follows (in thousands): Tree Historical Cost Birch Historical Cost 250 300 440 30 70 Tree Fair Value 35 140 120 250 130 50 350 800 Cash Inventories Other current assets Land Plant and equipment - net Total assets Liabilities Capital Stock, $10 par Additional paid-in-capital Retained earnings Total liabilities and owner's equity 600 1,345 1,470 2,590 500 1,200 350 50 300 150 100 540 2,590 600 Required 1. Prepare the preliminary calculations for the acuisition of Tree. 2. Prepare all the journal entries to record the acquisition of Tree (show all of your work and place your calculations in the cells.). 3. Prepare a balance sheet for Birch Corporation immediately after the acquisition. (Prepare the worksheet to combine prior to preparing the combined balance sheet.) 1. Preliminary Calculations: Acquisition Price FMV of Tree Goodwill Check Figure - GW-465 2. Journal Entries to record the acquisition of Tree. To record the issuance of 35,000 shares of $10 par stock with a market price of $50 to acquire Tree Corporation To record the costs associated with the acquisition of Tree Corporation

Answer & Explanation Solved by verified expert

See Answer