On December 31, 2006, Alpha Corporation issued 18,000 shares of its Br 2 par (current fair value of Br 10 per share) common stock for all the outstanding common stock of Beta Corporation in a statutory merger. Out-of-pocket costs of the business combination paid by Alpha on December 31, 2006 are: Br 22,000 15,000 Br 37,000 Direct costs of the business combination Cost of registering and issuing common stock Total out-of-pocket costs of business combination Beta had the following balance sheet on December 31, 2006: Beta Corporation Balance Sheet December 31, 2006 Market Value In Birr 110,000 52,000 195,000 357,000 Book Value In Birr 96,000 52,000 172,00 320,000 Assets: Inventories. Other current assets Plant assets (net) Total assets. Liabilities & Stockholders' Equity: Liabilities 175,000 20,000 50,000 75,000 320,000 175,000 Common Stock, Br 5 Additional paid-in capital Retained earnings.. Total liabilities & Stockholders' equity.. par Additional Information: a special copyright was not previously recorded on Beta's records. The copyright has a current fair market value of Br 2,000. Beta had also Goodwill from previous business combinations that amounts Br 5,000 on the date of business combination. Required: Record the business combination under purchasing accounting. Show the calculation that backs up the entries
On December 31, 2006, Alpha Corporation issued 18,000 shares of its Br 2 par (current fair value of Br 10 per share) common stock for all the outstanding common stock of Beta Corporation in a statutory merger. Out-of-pocket costs of the business combination paid by Alpha on December 31, 2006 are: Br 22,000 15,000 Br 37,000 Direct costs of the business combination Cost of registering and issuing common stock Total out-of-pocket costs of business combination Beta had the following balance sheet on December 31, 2006: Beta Corporation Balance Sheet December 31, 2006 Market Value In Birr 110,000 52,000 195,000 357,000 Book Value In Birr 96,000 52,000 172,00 320,000 Assets: Inventories. Other current assets Plant assets (net) Total assets. Liabilities & Stockholders' Equity: Liabilities 175,000 20,000 50,000 75,000 320,000 175,000 Common Stock, Br 5 Additional paid-in capital Retained earnings.. Total liabilities & Stockholders' equity.. par Additional Information: a special copyright was not previously recorded on Beta's records. The copyright has a current fair market value of Br 2,000. Beta had also Goodwill from previous business combinations that amounts Br 5,000 on the date of business combination. Required: Record the business combination under purchasing accounting. Show the calculation that backs up the entries
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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