Question

11. Ejercicio #1. Favor de responder en el espacio provisto. Realizar las entradas necesarias. Exercise 1: Journal entries to record an acquisition Piron Company issued 860,000 shares of $10 par common stock with a fair value of $19,400,000 for all the voting common stock of Scana Company. In addition, Piron incurred the following costs: Legal fees to arrange the business $300,000 combination Cost of SEC registration, including S48,000 accounting and legal fees. (Direct Cost) Cost of printing and issuing net stock $12.000 certificates. (Direct Cost) Indirect costs of combining, including $140,000 allocated overhead and executive salaries Immediately before the acquisition in which Seana Company was dissolved Seana's assets and equities were as follows: Current Assets Plant Assets Liabilities Common Stock Retained earnings Book Value $7,000,000 11,000,000 3,400,000 17,000,000 2,600,000 Fair Value $7,800,000 16,600,000 3,400,000 REQUIRED: Prepare all journal entries on Piron's books to record the acquisition. Tu respuesta

Answer 1

Particulars	Amount	Amount
Business Purchase Account Dr	194,000,000
To Liquidator of Transferor Company		194,000,000
(Being the purchase consideration recorded)
Current Assets A/c     Dr	7,000,000
Plant Assets A/c     Dr	11,000,000
P& L A/c Dr	199,000,000
To Liabilities		3,400,000
To Common Stock		17,000,000
To Retained Earnings		2,600,000
To Business Purchase Account		194,000,000
(Being assets, liabilities and reserves are taken over from the transferor company and incorporated in the books)
Preliminary Expenses Account Dr	500,000
To Bank		500,000
(Being cost incurred for taking over the company)
Liquidator of Transferor Company Dr	194,000,000
To Shares of Common Stock		8,600,000
To Share Premium Account		185,400,000
(Being the shares are allotted at a premium)