Bennett Corporation acquires all the assets and liabilities of Alpha Company in a statutory merger by issuing to Alpha 3...
Bennett Corporation acquires all the assets and liabilities of Alpha Company in a statutory merger by issuing to Alpha 30,000 shares of $1 par common stock. The shares issued have a total market value of $400,000. Bennett incurs legal fees of $25,000 in connection with the combination and stock issue costs of $10,000. The recorded amount of the stock issued by Bennett to create the combination is:
$410,000
$400,000
390,000
$445,000
Homework Answers
Bennett Corporation acquires all the assets and liabilities of Alpha Company in a statutory merger by issuing to Alpha 30,000 shares of $1 par common stock.
The shares issued by Bennett Corporation have a total market value of $400,000.
Legal fees of $25,000 in connection with the combination and stock issue costs of $10,000 will be charged to expense since these are not a part of the acquisition cost.
The recorded amount of the stock issued by Bennett to create the combination is $400,000 (the fair market value of the stock issued)
Correct option is (b)
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