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Unformatted text preview: Other current assets $140,000 Plant Assets 920,000 Current liabilities (80,000) Long-term debt (190,000 ) 790,000 Amount of goodwill $ 10,000 CASES Case 5–1 Solamente Corporation's accounting for the out-of-pocket costs of the business combination with Mika Company does not comply with generally accepted accounting principles. Direct out-of-pocket costs incurred by a combinor in a combination are included in the total cost of the combinee. Legal fees and other out-of-pocket costs of the combination paid by Mika on behalf of Solamente should have been recognized as an account receivable by Mika and an account payable by Solamente; legal and other expenditures on its own behalf with respect to the combination with Solamente should have been recognized as expenses by Mika....
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- Spring '08
- Balance Sheet, Generally Accepted Accounting Principles, Mika, applicable state law, Solamente, Solamente Corporation