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Question - Pernot Corp and Kool Mo LTD merge on January 1, 2020. Before the merger transaction, the balance sheets of the two companies were as follows: (in millions)
Pernot Corp
Kool Mo LTD
Assets
$2,666
$2,500
Liabilities
$1,192
$900
Common stock ($1 par value)
150
100
Additional paid-in capital
xxx
220
Retained earnings
1,100
Pernot issues 60,000 shares of its common stock with a market value of $6.8 billion to the owners of Kool Mo in return for all of their shares of Kool Mo common stock. The assets of Kool Mo have a market value in excess of book value of $68 million.
Required -
a. Calculate Kool Mo's Retained Earnings at January 1, 2020?
b. Calculate the goodwill as a result of this transaction.
c. Calculate Pernot's additional paid-in capital at January 1, 2020.
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