The Poonamalie Company paid $6,000,000 in cash to the shareholders of the Slys Company for all...

 

Transcribed Image Text:

The Poonamalie Company paid $6,000,000 in cash to the shareholders of the Slys Company for all of Slys' outstanding shares. Attorneys' fees related to the combination were $200,000, paid in cash. A comparison of the book and fair values of Slys' assets and liabilities follows: Cash and receivables Equity method investments Inventory Plant assets, net. Current liabilities Long-term debt Net assets Book Value Fair Value $50,000 $50,000 300,000 400,000 700,000 300,000 2,000,000 1,200,000 (350,000) (350,000) (1,800,000) (1,700,000) $900,000 $(100,000) Required a. Prepare the journal entry made by Poonamalie to record the business combination as a merger. General Journal Description Debit Credit Cash and receivables Equity method investments Inventory Plant assets Merger expenses (income) Current liabilities Long-term debt The Poonamalie Company paid $6,000,000 in cash to the shareholders of the Slys Company for all of Slys' outstanding shares. Attorneys' fees related to the combination were $200,000, paid in cash. A comparison of the book and fair values of Slys' assets and liabilities follows: Cash and receivables Equity method investments Inventory Plant assets, net. Current liabilities Long-term debt Net assets Book Value Fair Value $50,000 $50,000 300,000 400,000 700,000 300,000 2,000,000 1,200,000 (350,000) (350,000) (1,800,000) (1,700,000) $900,000 $(100,000) Required a. Prepare the journal entry made by Poonamalie to record the business combination as a merger. General Journal Description Debit Credit Cash and receivables Equity method investments Inventory Plant assets Merger expenses (income) Current liabilities Long-term debt