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Poe Corporation merged with Saxe Corporation on December 31, 20X3. Poe issued 200,000 shares of its $10 par value common stock, worth $18 per share, to acquire all of Saxe's common stock. Before the merger, Poe had $6.8 million in stockholders' equity comprising common stock of $3 million, additional paid-in capital of $1.3 million and retained earnings of $2.5 million. Saxe had stockholders' equity of $2.5 million comprising common stock of $1.5 million, additional paid-in capital of $150,000 and retained earnings of $850,000.

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527 views1 page

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Poe Corporation merged with Saxe Corporation on December 31, 20X3. Poe issued 200,000 shares of its $10 par value common stock, worth $18 per share, to acquire all of Saxe's common stock. Before the merger, Poe had $6.8 million in stockholders' equity comprising common stock of $3 million, additional paid-in capital of $1.3 million and retained earnings of $2.5 million. Saxe had stockholders' equity of $2.5 million comprising common stock of $1.5 million, additional paid-in capital of $150,000 and retained earnings of $850,000.

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Jichang Hik
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1. On December 31, 20X3, Saxe Corporation was merged into Poe Corporation.

In the business combination, Poe issued 200,000 shares of its $10 par
common stock, with a market price of $18 a share, for all of Saxe’s common
stock. The stockholders’ equity section of each company’s balance sheet
immediately before the combination was:

Poe Saxe Common Stock $3,000,000 $1,500,000 Additional Paid-In Capital


1,300,000 150,000 Retained Earnings 2,500,000 850,000 $6,800,000
$2,500,000

ans

(200,000* ($18-$10)) [Existing additional paid-in capital on P's books] +


1,300,000 [Additional paid-in capital from new stock issuance] = $2,900,000
[Additional paid in capital to be reported]

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