Journal entries to record an acquisition
Pan Company issued 480,000 shares of $10 par common stock with a fair value of $10,200,000 for all the voting common stock of Set Company. In addition, Pan incurred the following costs:
|
Legal fees to arrange the business combination |
$100,000 |
|
Cost of SEC registration, including accounting |
|
|
and legal fees |
48,000 |
|
Cost of printing and issuing net stock certificates |
12,000 |
|
Indirect costs of combining, including allocated |
|
|
overhead and executive salaries |
80,000 |
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 |
$4,000 |
$4,400 |
|
Plant assets |
6000 |
8,800 |
|
Liabilities |
1,200 |
1,200 |
|
Common stock |
8,000 |
|
|
Retained earnings |
800 |
REQUIRED: Prepare all journal entries on Pan’s books to record the acquisition.