On January 1, 20X1, Zambrano Engines Company exchanged 5,000 shares of its $12 par value common...

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On January 1, 20X1, Zambrano Engines Company exchanged 5,000 shares of its $12 par value common stock for all the outstanding stock of Hawkins Steel Company in a stock acquisition. Zambrano Engines incurred $50,000 of legal fees associated with the combination and $10,000 of stock issue costs. At the date of combination, the following information was available: Fair value of Hawkins's net identifiable assets: $160,000 Market value of Zambrano Engines shares: $35 per share Hawkins Steel's stockholders' equity section of its December 31, 20X0, balance sheet: Common Stock, $5 par Additional Paid-In Capital Retained Earnings Total Stockholders' Equity $ 50,000 20,000 75,000 $145.000 Required: Record the combination on the books of Zambrano Engines assuming the business combination is treated as a purchase. (Hint: Debit the investment account for the amount of the purchase. You do not need to record the individual assets and liabilities.) On January 1, 20X1, Zambrano Engines Company exchanged 5,000 shares of its $12 par value common stock for all the outstanding stock of Hawkins Steel Company in a stock acquisition. Zambrano Engines incurred $50,000 of legal fees associated with the combination and $10,000 of stock issue costs. At the date of combination, the following information was available: Fair value of Hawkins's net identifiable assets: $160,000 Market value of Zambrano Engines shares: $35 per share Hawkins Steel's stockholders' equity section of its December 31, 20X0, balance sheet: Common Stock, $5 par Additional Paid-In Capital Retained Earnings Total Stockholders' Equity $ 50,000 20,000 75,000 $145.000 Required: Record the combination on the books of Zambrano Engines assuming the business combination is treated as a purchase. (Hint: Debit the investment account for the amount of the purchase. You do not need to record the individual assets and liabilities.)

Answer rating: 100% (QA)

Value of Share exchanges 17500000 Legal Fees 5000000 Stock Issu... View the full answer