On February 1, Piscina Corporation completed a combination with Swimwear Company. At that date, Swimwear’s account balances were as follows: Book Value Fair Value Inventory $ 600,000 $ 650,000 Land 450,000 750,000 Buildings 900,000 1,000,000 Unpatented technology 0 1,500,000 Common stock ($10 par value) (750,000 ) Retained earnings, 1/1 (1,100,000 ) Revenues (600,000 ) Expenses 500,000 ________________________________________ Piscina issued 30,000 shares of its common stock with a par value of $25 and a fair value of $150 per share to the owners of Swimwear for all of their Swimwear shares. Upon completion of the combination, Swimwear Company was formally dissolved. Prior to 2002, business combinations were accounted for using either purchase or pooling of interests accounting. The two methods often produced substantially different financial statement effects. For the scenario above, a. What are the respective consolidated values for Swimwear’s assets under the pooling method and the purchase method? b. Under each of the following methods, how would Piscina account for Swimwear’s current year, but prior to acquisition, revenues and expenses? • Pooling of interests method. • Purchase method.

On February 1, Piscina Corporation completed a combination with Swimwear Company. At that date, Swimwear’s account balances were as follows:

	Book Value			Fair Value
Inventory	$	600,000		$	650,000
Land	450,000			750,000
Buildings	900,000			1,000,000
Unpatented technology	0			1,500,000
Common stock ($10 par value)	(750,000		)
Retained earnings, 1/1	(1,100,000		)
Revenues	(600,000		)
Expenses	500,000

Piscina issued 30,000 shares of its common stock with a par value of $25 and a fair value of $150 per share to the owners of Swimwear for all of their Swimwear shares. Upon completion of the combination, Swimwear Company was formally dissolved.

Prior to 2002, business combinations were accounted for using either purchase or pooling of interests accounting. The two methods often produced substantially different financial statement effects. For the scenario above,

a.      What are the respective consolidated values for Swimwear’s assets under the pooling method and the purchase method?

b.     Under each of the following methods, how would Piscina account for Swimwear’s current year, but prior to acquisition, revenues and expenses?

• Pooling of interests method.
• Purchase method.

Price: 10 USD

Question Code: 20006