Duko Corporation is acquiring the net assets, exclusive of cash, of Weber Company as of January 1, 2015, at which time Weber Company’s balance sheet is as follows: Duko Corporation feels that the following fair values should be used for Weber’s book values: Cash (no change)…………………………………………….$ 30,000 Accounts receivable……………………………………………60,000 Investment in marketable securities…………………………..150,000 Land…………………………………………………………..450,000 Buildings (no change)…………………………………………450,000 Equipment…………………………………………………….600,000 Accounts payable…………………………………………….120,000 Income tax payable (no change)……………………………..190,000 Duko will issue 20,000 shares of its common stock with a $2 par value and a quoted fair value of $60 per share on January 1, 2015, to Weber Company to acquire the net assets. Duko also agrees that two years from now it will issue additional securities to compensate Weber shareholders for any decline in value below that on the date of issue. The estimated settlement amount is $20,000. This is considered to be an equity agreement (not a liability). 1. Record the acquisition on the books of Duko Corporation on January 1, 2015. Include support for calculations used to arrive at the values assigned to the assets and liabilities. Use value analysis to aid your solution. 2. Record settlement (if any) for contingent consideration on January 1, 2017, assuming that the quoted value of the Duko stock is $57.50. (Round shares to nearest whole share.) View Solution:
Duko Corporation is acquiring the net assets exclusive of cash

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