Home / Questions / On February 15 2005 officers of Sun Corporation agreed with George Merlo sole stockholdero...
On February 15, 2005, officers of Sun Corporation agreed with George Merlo, sole stockholderof Merlo Company and Merlo Industries, Inc., to acquire all his common stock ownershipin the two companies as follows:
1. 10,000 shares of Shane’s $1 par common stock (current fair value $30 a share) would be issued to George Merlo on February 28, 2005, for his 1,000 shares of $10 par common stock of Merlo Company. In addition, 20,000 shares of Sun common stock would be issued to George Merlo on February 28, 2010, if aggregate net income of Merlo Company for the five-year period then ended exceeded $300,000.
2. $250,000 cash would be paid to George Merlo on February 28, 2005, for his 10,000 shares of $1 par common stock of Merlo Industries, Inc. In addition $250,000 in cash would be paid to George Merlo on February 28, 2010, if aggregate net income of Merlo Industries, Inc., for the five-year period then ended exceeded $300,000.
Both Merlo Company and Merlo Industries, Inc., were to be merged into Sun on February28, 2005, and were to continue operations after that date as divisions of Sun.George Merlo also agreed not to compete with Sun for the period March 1, 2005,through February 28, 2010. Because the merger was negotiated privately and George Merlosigned a “letter agreement” not to dispose of the Sun common stock he received, thebusiness combination was not subject to the jurisdiction of the SEC. Out-of-pocket costs ofthe business combination may be disregarded.
Selected financial statement data of the three constituent companies as of February 28,
2005 (prior to the merger), were as follows:
|
|
Sun Corporation |
Merlo Company |
Merlo Industries, Inc. |
|
Total assets |
$25,000,000 |
$ 500,000 |
$ 600,000 |
|
Stockholders’ equity |
10,000,000 |
200,000 |
300,000 |
|
Net sales |
50,000,000 |
1,500,000 |
2,500,000 |
|
Basic earnings per share |
5 |
30 |
3 |
The controller of Sun prepared the following condensed journal entries to record themerger on February 28, 2005:
Assets other than goodwill 600,000
Goodwill 10,000
Liabilities 300,000
Common Stock 10,000
Common Stock to Be Issued 20,000
Paid-in Capital in Excess of Par 280,000
To record merger with Merlo Company, with identifiable assets andliabilities recorded at current fair values and goodwill recognized.
Assets 650,000
Goodwill 150,000
Liabilities 300,000
Payable to George Merlo 250,000
Cash 250,000
To record merger with Merlo Industries, Inc., with assets andliabilities of Merlo Industries, Inc., recorded at current fairvalues and goodwill recognized.
Instructions
Ø Do you concur with the controller’s journal entries? Explain.
Feb 06 2020 View more View Less
Find the angle between the planes x+2y+3z=0 and 3x+2y+z=0.
Aug 08 2020The nominal or quoted interest rate is calculated based on several components. It is determined using the following equation: Quoted Interest Rate,(r) IP DRP LP MRP r. s ...
Dec 02 2019Details of the work: Subject: research paper Topic: Evaluate the employment opportunities/situation in Australia over the last decade Background have to include Growi...
May 01 2020The demand schedule pertains to sandwiches demanded per week.PriceHary's Quantity DemandedDarby's Quantity DemandedJake's Quantity Demanded$3343$5120Refer to this table, ...
Jun 08 2021A 36 kg boy sitting in a stationary 9 kg wagon wants to simulate rocket propulsion by throwing bricks out of the wagon. Neglect horizontal forces on the wagon's wheel...
Jun 16 2020Which of these statements about production scale effects is falsea. The LRATC curve is made up of the separate SRATC curve of plants of various sizes.b. Diseconomies of s...
Jul 05 2021A mixture is 10.0 mol % ethyl acohol, 75.0 mol % ethyl acetate(C4H8O2), and 15.0 mol % aceticacid. Calculate mass fraction of eachcompound . What is theaverage molecular ...
Aug 08 2020Discuss the literature review related to lean manufacturing case studies in 1000 words. Support your answer with references.
Aug 21 2020Choose the correct answer below and show the solution.1. ORDINARY ANNUITY: Find the amount of an ordinary annuity of Php500 every end of the month for 3 years at 12% comp...
Apr 08 2021Draw the main Lewis structure of NOF. Draw the nonbonding electron using the dot notation and bonding electrons as a bond.
May 21 2021