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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
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
Common Stock, Br 5 par
Additional paid-in capital
Retained earnings...
Total liabilities & Stockholders' equity.
175,000
20,000
50,000
75,000
320,000
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
Transcribed Image Text: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 Common Stock, Br 5 par Additional paid-in capital Retained earnings... Total liabilities & Stockholders' equity. 175,000 20,000 50,000 75,000 320,000 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
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Corporate Distributions and Adjustments
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education