Question

On August 31 of the current year, Pine Corp. issued 100,000 shares of its $20 par value common stock for all of the net assets of SAP, Inc. The collection of assets and liabilities acquired do not meet the definition of a business under ASC 805. The fair value of Pine's common stock on the acquisition date was $63 per share. Pine paid a fee of $164,000 to the consultant who arranged this acquisition. Costs of registering and issuing the equity securities amounted to $89,000. What amount should Pine record in total for the net assets acquired?

Answer 1

The amount that Pine Corp. should record for the net assets acquired is $6,300,000.

How much should Pine Corp. record?

The amount that should be recorded as the total for net assets acquired, is the fair value of the shares sold to finance the purchase.

In this case that is:

= 100,000 shares x 63 per share

= $6,300,000

In conclusion, $6,300,000 should be recorded.

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