[TravisB]

Hi All,

I’m new to the forum and have a little issue with the below question. I think Becker does a terrible job on consolidations. Can you help clarify this for me please.

On June 30, Year 1, Pane Corp. Exchanged 150,000 Shares of it $20 Par value common stock for all of Sky Corps common stock. At that date the fair value of Pane’s common stock issued was equal to Book value of Sky’s net assets.

Pane Sky

R/e – 12/31-Year 0 $3,200,000 $925,000

Net Income – Six Months 6/30 Yr 1 800,000 275,000

Dividends Paid 3/25/Year 1 750,000

If business combo is accounted for as an acquisition, what amount of R/E would Pane Report, in its June 30, year 1, consolidated Balance Sheet?

Answer: $3,250,000 or $3,525,000?

I answered 3,525,000 because I thought Sky’s income would be added to Pane’s and then closed to R/E. Does the 800,000 include the 275,000?