Asset versus stock acquisition. Bart Company is contemplating the acquisition of the net assets of Crow Company for $800,000 cash. To complete the transaction, acquisition costs are $15,000. The balance sheet of Crow Company on the purchase date is as follows:
| Crow Company Balance Sheet December 31, 20X1 |
|
Assets
|
|
Liabilities and Equity
|
|
|
Current assets .
|
$ 80,000
|
Liabilities
|
$100,000
|
|
Land.
|
50,000
|
Common stock ($10 par). .
|
100,000
|
|
Building
|
450,000
|
Paid-in capital in excess of par
|
150,000
|
|
Accumulated depreciation-building .
|
(200,000)
|
Retained earnings .
|
230,000
|
|
Equipment
|
300,000
|
|
|
|
Accumulated depreciation-equipment .
|
(100,000)
|
|
|
|
Total assets. .
|
$ 580,000
|
Total liabilities and equity .
|
$580,000
|
The following fair values have been obtained for Crow's identi?able assets and liabilities:
|
Current assets
|
$100,000
|
|
Land. .
|
75,000
|
|
Building .
|
300,000
|
|
Equipment .
|
275,000
|
|
Liabilities
|
102,000
|
1. Record the acquisition of the net assets of Crow Company on Bart Company's books.
2. Record the sale of the net assets on the books of Crow Company.
3. Record the acquisition of 100% of the common stock of Crow Company on Bart's books. Crow Company will remain a separate legal entity.