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On March 31, Jumbo purchases 100% of Larz for $7,500,000 cash and 2,200,000 shares of Jumbo voting common stock (par value of $1). Jumbo's stock had a fair value on March 31 of $40. Jumbo got 12,000,000 shares of Larz's voting common stock (par value $4) having a fair value of $50 per share. Jumbo incurs $5,000,000 in direct combination costs and $3,500,000 in stock issuance costs. Using the purchase method, what is Jumbo's COST for this acquisition?

On March 31, Jumbo purchases 100% of Larz for $7,500,000 cash and 2,200,000 shares of Jumbo voting common stock (par value of $1). Jumbo's stock had a fair value on March 31 of $40. Jumbo got 12,000,000 shares of Larz's voting common stock (par value $4) having a fair value of $50 per share. Jumbo incurs $5,000,000 in direct combination costs and $3,500,000 in stock issuance costs. Using the purchase method, what is Jumbo's COST for this acquisition?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On March 31, Jumbo purchases 100% of Larz for $7,500,000 cash and 2,200,000 shares of Jumbo voting common stock (par value of $1). Jumbo's stock had a fair value on March 31 of $40. Jumbo got 12,000,000 shares of Larz's voting common stock (par value $4) having a fair value of $50 per share. Jumbo incurs $5,000,000 in direct combination costs and $3,500,000 in stock issuance costs. Using the purchase method, what is Jumbo's COST for this acquisition?
Transcribed Image Text:On March 31, Jumbo purchases 100% of Larz for $7,500,000 cash and 2,200,000 shares of Jumbo voting common stock (par value of $1). Jumbo's stock had a fair value on March 31 of $40. Jumbo got 12,000,000 shares of Larz's voting common stock (par value $4) having a fair value of $50 per share. Jumbo incurs $5,000,000 in direct combination costs and $3,500,000 in stock issuance costs. Using the purchase method, what is Jumbo's COST for this acquisition?
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