Expert answer:Acquistions/Mergers: Mason’s shareholders assign
Answer & Explanation:I need a paper of about 700 words describing each of the questions below based on the details of the acquisition. I have attached the acquistion data for balance sheet .Explain what type of merger this is. JIM distributes its stock and cash to Mason in exchange for all of its assets.Calculate Mason’s gain on this transaction.How much of this gain will Mason recognize?How must tax liability will Mason incur from this transferMason distributes the JIM stock and cash to its shareholders for all of their shares of Mason’s stock. Shareholders’ basis in this stock is $600,000.Calculate how much gain the Mason’s shareholders will realize and recognize on this transfer.How must tax liability will Mason’s shareholders incur from this transfer?Explain the tax implications for JIMJIM is acquiring all of the assets of Mason Machining, Inc. in a
merger transaction. Mason transfers assets having a FMV of $1,775,000 and an
adjusted basis of $995,000 and $200,000 in liabilities to JIM in exchange for
$750,000 in cash and $800,000 of JIM’s common stock.
mason_machining.docx
mason_machining.docx
Unformatted Attachment Preview
Mason Machining, Inc.
Acquisition Data
Actual
2005
Actual
2006
Difference
Balance Sheet
Cash
$165,000
$200,000
$35,000
Other Assets
1,500,000
1,575,000
75,000
Total Assets
$1,665,000
$1,775,000
$110,000
$165,000
$225,000
$60,000
1,000,000
500,000
$1,665,000
1,000,000
550,000
$1,775,000
0
50,000
$50,000
$5,250,000
2,500,000
$2,750,000
$6,000,000
2,800,000
$3,200,000
$750,000
$300,000
$450,000
900,000
500,000
$1,350,000
950,000
500,000
$1,750,000
$50,000
$0
$400,000
$5,250,000
2,500,000
2,750,000
900,000
$1,850,000
$6,000,000
2,800,000
3,200,000
950,000
$2,250,000
$750,000
300,000
450,000
$50,000
$400,000
$28,000
3,000
240,000
$271,000
1,200,000
$1,471,000
$40,000
5,000
336,500
$381,500
1,080,000
$1,461,500
$58,000
8,000
468,400
$534,400
960,000
$1,494,400
Liabilities
Common Stock, $1 par
Retained Earnings
Total Liabilities & Equity
Income
Sales
Variable Expenses
Contribution Margin
Less Fixed Expenses:
Costs
Depreciation
Net Operating Income
Cash Flow
Sales
Less Variable Expenses
Contribution Margin
Less Costs
Net Annual Cash Inflow
Assets
Current Assets
Cash
Accounts Receivable
Inventory
Total Current Assets
Plant Equipment
Total Assets
Current Liabilities
$76,000
9,000
380,000
$383,500
960,000
$1,343,500
Accounts Payable
Equities
Owners’ Equity
Retained Earnings
Total Owners’ Equity
Total Liabilities
$5,000
$8,000
$6,000
$5,000
$1,200,000
266,000
1,466,000
$1,471,000
$1,200,000
253,500
1,453,500
$1,461,500
$1,200,000
288,400
1,488,400
$1,494,400
$1,200,000
138,500
1,338,500
$1,343,500
…
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