techstocks.com
To: The Ditchdigger (4687 )
From: Ellen G.
Sunday, Oct 12 1997 3:50PM EST
Reply #4702 of 18578
"On September 21, 1995 the Company acquired certain assets of Ekrhen Corporation. The consideration paid for this acquisition consisted of 100,000 shares of common stock and the assumption of $200,000 of debt.
As discussed above, the books and records of the Company were not available prior to December 31, 1995. It appears from the September 30, 1995 and December 31, 1995 quarterly financial statements that the shares issued were valued at $600,000 and debt was recorded at $200,000. On a consolidated basis it appears that the total acquisition cost of $800,000 was recorded as property, plant and equipment.
However, since the contract called for 100,000 shares to be issued at $6.50 per share and the debt assumed aggregated $200,000, the acquisition should have been recorded at $850,000, and has been so adjusted. Current management questioned whether the share value was properly computed and therefore in January 1997 engaged an independent appraiser to determine whether amounts recorded in the financial statements properly reflect the fair values of the assets acquired.
In as much as there were detailed listings of the equipment acquired, the appraiser through study and inspection, was able to provide a value for the equipment at or about the time of the acquisition. The appraised value aggregated $333,590. The equipment acquired has been retroactively adjusted to this amount with an equivalent adjustment to additional paid-in capital." |
