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Following are selected account balances from Penske Company and Stanza Corporation as of December 31, 2018:
Penske Stanza Revenues$(746,000) $(792,000) Cost of goods sold 266,100 198,000 Depreciation expense 201,000 318,000 Investment income Not given 0 Dividends declared 80,000 60,000 Retained earnings, 1/1/18 (670,000) (214,000) Current assets 434,000 560,000 Copyrights 984,000 537,500 Royalty agreements 688,000 1,130,000 Investment in Stanza Not given 0 Liabilities (546,000) (1,517,500) Common stock (600,000)($20 par) (200,000)($10 par)Additional paid-in capital (150,000) (80,000)
Note: Parentheses indicate a credit balance.
On January 1, 2018, Penske acquired all of Stanza’s outstanding stock for $780,000 fair value in cash and common stock. Penske also paid $10,000 in stock issuance costs. At the date of acquisition copyrights (with a six-year remaining life) have a $592,000 book value but a fair value of $760,000.
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