Pan Company issued 960,000 shares of $10 par common stock with a fair value of $20,400,000 for all the voting common stock of Set Company. In addition, Pan incurred the following costs:
Legal fees to arrange the business combination | $200,000 |
Cost of SEC registration, including accounting and legal fees | 96,000 |
Cost of printing and issuing net stock certificates | 24,000 |
Indirect costs of combining, including allocated overhead and executive salaries | 160,000 |
Immediately before the acquisition in which Set Company was dissolved, Set’s assets and equities were as follows (in thousands):
| Book Value | Fair Value |
Current assets | $ 8,000 | $ 8,800 |
Plant assets | 12,000 | 17,600 |
Liabilities | 2,400 | 2,400 |
Common stock | 16,000 |
|
Retained earnings | 1,600 |
|
REQUIRED: Prepare all journal entries on Pan’s books to record the acquisition.
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