TUGAS 2 BUSINESS COMBINATION FATA 2015

TUGAS 2
BUSINESS COMBINATION

On January 3, 2018, Pir Corporation enters into a business combination with Sea
Corporation in which Sea is dissolved. Pir pays $3.465.000 for Sea, the consideration
consisting of 66,000 shares of Pir $21 par common stock with a market value of $52,5 per
share. In addition, Pir pays the following expenses in cash at the time of the merger:
 Finders’ fee $147.000
 Accounting and legal fees $273.000
 Registration and issuance costs of securities $168.000
Total $588.000
Statement of Financial Position and fair value information for the two companies on
December 31, 2017, immadiately before acquisition, is as follows (in $000):
Pir Sea
Book Book Fair Value
Value Value
Cash 630 126 126
Account Receivable-net 966 210 168
Inventories 2.184 336 504
Land 1.680 420 630
Buildings-net 4.200 840 1.260
Equipment-net 2.100 1.260 1.050
Total Assets 11.760 3.192 3.738
Account Payable 1.260 168 168
Note Payable 2.520 840 756
Capital Stock, $21 par 3.360 1.260
Additional paid-in capital 2.520 210
Retained Earnings 2.100 714
Total liabilities and owners’ equity 11.760 3.192

Required :
1. Prepare all necessary journal entries for the acquisition including :
a. To record investment in Sea
b. To record other investment cost
c. To record allocation of the cost acquiring Sea Corp to identifiable net asset according
to their fair value and to goodwill
2. Prepare a Statement of Financial Position for Pir Corporation as of January 2, 2018,
immadietely after the acquisition!

FAQIH – HANIFA – IRMAYANTI - JHOICE 1