Assignment...Fin Acct (II)
Q3) Grant Company has been looking to expand its operations and has decided to acquire the assets of TURNER Company and MURPHY Company. GRANT Company will issue 25,000 shares of its \( \mathrm{Br} 10 \) par common stock to acquire the net assets of Turner Company and will issue 12,000 shares to acquire the net asset of Murphy Company. The Balance Sheet of the acquired companies (combinees) is as follows:
\begin{tabular}{|c|c|c|}
\hline & \begin{tabular}{c}
Turner \\
Company
\end{tabular} & \begin{tabular}{l}
Murphy \\
Company
\end{tabular} \\
\hline Assets: & In Birr & In Birr \\
\hline Accounts Receivables...... & 200,000 & 80,000 \\
\hline Inventory & 150,000 & 85,000 \\
\hline Land & 150,000 & 50,000 \\
\hline Building & 500,000 & 300,00 \\
\hline Accumulated Depreciation & \( (150,000) \) & \( (110,000 \) \\
\hline Total Assets & \( \underline{850,000} \) & \( \underline{405,000} \) \\
\hline & \multirow{8}{*}{\begin{tabular}{l}
160,000 \\
100,000 \\
300,000 \\
290,000 \\
850,000
\end{tabular}} & \\
\hline & & \\
\hline Liabilities and SH Equity: & & \multirow{6}{*}{\begin{tabular}{r}
55,000 \\
100,000 \\
100,000 \\
150,000 \\
405,000 \\
\end{tabular}} \\
\hline Current liabilities & & \\
\hline Bonds payable & & \\
\hline Common Stock (Br 10 par) & & \\
\hline Retained earnings & & \\
\hline Total liabilities and equity & & \\
\hline
\end{tabular}
The following current fair values (CFV) are agreed upon by the BODs of the combinees companies and Grant Company while the others have the same book values and current fair values:
Advanced Financial Accounting (I)Page 2
\begin{tabular}{|l|r|r|}
\hline & \begin{tabular}{c}
Turner \\
Company
\end{tabular} & \begin{tabular}{c}
Murphy \\
Company
\end{tabular} \\
\hline Inventory & 200,000 & 100,000 \\
Land & 200,000 & 60,000 \\
Building (net) & 400,000 & 350,000 \\
Bonds payable_._. & 80,000 & 95,000 \\
\hline
\end{tabular}
Grant's stock is currently traded at \( \mathrm{Br} 40 \) per share. Grant will incur \( \mathrm{Br} 5,000 \) direct acquisition cost in Turner Company and \( \mathrm{Br} 4,000 \) of direct acquisition cost in Murphy Company. Grant also incurred \( \mathrm{Br} \) 13,000 other indirect cost of acquisition and \( \mathrm{Br} 15,000 \) registration and issue cost.
Required: Record the acquisition cost on the books of Grant
\begin{tabular}{|l|c|c|}
\hline Checking Figures: & Turner Company & Murphy Company \\
\hline Total Acquisition Cost & \( \mathrm{Br} 1,005,000 \) & \( \mathrm{Br} 484,000 \) \\
Net assets & 760,000 & 440,000 \\
Goodwill & 245,000 & 44,000 \\
\hline
\end{tabular}
