On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.

On January 1, 2023, the stockholders of Ayayai and Blossom agreed to a consolidation. Because FASB requires that one party be recognized as the acquirer and the other as the acquiree, it was agreed that Ayayai was acquiring Blossom. Ayayai agreed to issue 22,000 shares of its $10 par stock to acquire all the net assets of Blossom at a time when the fair value of Ayayai's common stock was $15 per share. On the date of consolidation, the fair values of Blossom's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, $164,000. Ayayai will incur $22,000 of direct acquisition costs and $6,600 in stock issue costs.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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