Sally Company is acquired by Pat Company on January 1, 2012. Patty exchanges 60,000 shares of $ 1 par value, with a fair value of $ 18 per share, for the net assets of Sally Company. Pat incurs the following costs as a result of this transaction:

Acquisition costs Stock registration and issuance costs $ 25,000

Stock registration $ 10,000

The book balance and fair value on the day of acquisition at Sally Company is as follows :

	Book Value	Fair Value
Cash	100,000	100,000
Inventory	250,000	270,000
Land	200,000	180,000
Building Net	250,000	300,000
Equipment Net	200,000	220,000
Current liabilities	80,000	80,000
Bonds payable	500,000	425,000
Common stock	200,000
Additional paid-in capital	100,000
Retained earnings	120,000

Instruction:

1. Prepare the analysis for this business combination

2 Prepare the general journal entry for the acquisition

3. Prepare the general journal entry to record the indirect and direct cost of the acquisition

4. Prepare the general journal entry to record the business combination in your ledgers.

Answer rating: 100% (QA)

1 Analysis of Business Combination Calculation of Net Identifiable Assets Particulars Amount Cash 100000 inventory 270000 Land 180000 Bulding 300000 E... View the full answer