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Prince Corporation, a wholesale vehicle distributor, acquires all of the stock of Squire Service Corporation for one million shares of Prince stock, valued at $56 per share. Squire becomes a subsidiary of Prince. Professional fees connected with the acquisition are $1,920,000 and costs of registering and issuing the new shares are $960,000, both paid in cash. The balance sheets of Prince and Squire immediately prior to the acquisition are shown next. Balance Sheets Prince Squire Cash $4,480,000 $480,000 Accounts receivable 9,600,000 4,320,000 Parts inventory -- 8,320,000 Vehicle inventory 24,000,000 -- Equipment, net 64,000,000 28,160,000 Total assets $102,080,000 $41,280,000 Current liabilities $8,000,000 $4,960,000 Long-term liabilities 40,000,000 13,760,000 Stockholders' equity 54,080,000 22,560,000 Total liabilities and equity $102,080,000 $41,280,000 In reviewing Squire's assets and liabilities, you determine the following: On a discounted present value basis, the accounts receivable have a fair value of $4,160,000, and the long-term liabilities have a fair value of $12,800,000. The current replacement cost of the parts inventory is $9,600,000. The current replacement cost of the equipment is $31,200,000. Squire occupies its service facilities under an operating lease with ten years remaining. The rent is below current market levels, giving the lease an estimated fair value of $2,000,000. Squire has long-term service contracts with several large fleet owners. These contracts have been profitable; the present value of expected profits over the remaining term of the contracts is estimated at $3,200,000. Squire has a skilled and experienced work force. You estimate that the cost to hire and train replacements would be $1,200,000. Squire's trade name is well-known among fleet owners and is estimated to have a fair value of $320,000. For all answers below, enter your answers in thousands. For example, $1,000,000 is $1,000. (a) Prepare the acquisition entry and a working paper to consolidate the balance sheets of Prince and Squire as of the date of acquisition (in thousands).

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