Balance sheet information for Sphinx Company at January 1, 2011, is summarized as follows:
Sphinx's assets and liabilities are fairly valued except for plant assets that are undervalued by $50,000.On January 2, 2011, Pyramid Corporation issues 20,000 shares of its $10 par value common stock for all of Sphinx's net assets and Sphinx is dissolved.Market quotations for the two stocks on this date are:
Required:
1.Calculate Pyramid's investment cost of Sphinx Corporation.
2.Calculate any goodwill from the business combination.

Question

Balance sheet information for Sphinx Company at January 1, 2011, is summarized as follows:
  Sphinx's assets and liabilities are fairly valued except for plant assets that are undervalued by $50,000.On January 2, 2011, Pyramid Corporation issues 20,000 shares of its $10 par value common stock for all of Sphinx's net assets and Sphinx is dissolved.Market quotations for the two stocks on this date are:
  Required:
1.Calculate Pyramid's investment cost of Sphinx Corporation.
2.Calculate any goodwill from the business combination.

Quizplus · Accepted Answer

The Answer of Balance sheet information for Sphinx Company at January 1, 2011, is summarized as follows:
  Sphinx's assets and liabilities are fairly valued except for plant assets that are undervalued by $50,000.On January 2, 2011, Pyramid Corporation issues 20,000 shares of its $10 par value common stock for all of Sphinx's net assets and Sphinx is dissolved.Market quotations for the two stocks on this date are:
  Required:
1.Calculate Pyramid's investment cost of Sphinx Corporation.
2.Calculate any goodwill from the business combination.

Balance Sheet Information for Sphinx Company at January 1, 2011