The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands). Note: Parenthesis indicate a credit balanceAssume an acquisition business combination took place at December 31, 2021. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.Compute consolidated expenses immediately following the acquisition.
A)$2,760.
B)$2,770.
C)$2,785.
D)$3,380.
E)$3,390.

Question

The financial statement amounts for the Atwood Company and the Franz Company as of December 31, 2021, are presented below. Also included are the fair values for Franz Company's net assets (all numbers are in thousands).  Note: Parenthesis indicate a credit balanceAssume an acquisition business combination took place at December 31, 2021. Atwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Franz. Stock issuance costs of $15 (in thousands)and direct costs of $10 (in thousands)were paid.Compute consolidated expenses immediately following the acquisition.
A)$2,760. 
B)$2,770. 
C)$2,785. 
D)$3,380. 
E)$3,390.

Quizplus · Accepted Answer

The consolidated expenses immediately following the acquisition can be computed as follows:

Consolidated net income = Atwood net income + Franz net income
= (450 + 200) = 650

Consolidated expenses = Atwood expenses + Franz expenses - indirect expenses - direct expenses - stock issuance costs
= (1,900 + 1,000 - 120 - 10 - 15) + (700 - 50) = 3,395

Therefore, the answer is choice B, which is the closest option available to the calculated value of $3,395.

The Financial Statement Amounts for the Atwood Company and the Franz