Example - Current Assets 300,000 Computers& Equip...

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Example: To illustrate the accounting treatment of these expenditures that frequently accompany BC, assume the following in connection with BigNet’s acquisition of Smallport. BigNet issues 20,000 shares of its $10 par common stock with a fair value of $2,600,000 in exchange for all of Smallport’s assets and liabilities BigNet pays an additional $100,000 in accounting and attorney fees. Internal secretarial and administrative costs of $75,000 are indirectly attributable to BigNet’s combination with Smallport. Cost of register and issue BigNet’s securities issued in the combination total $20,000 Following the acquisition method, BigNet would record these transactions as follows: BigNet Company’s Financial Records-December 31
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Unformatted text preview: Current Assets 300,000 Computers & Equip 600,000 Capitalised Software 1,200,000 Customer Contracts 700,000 Goodwill 50,000 Net Payable 250,000 Comm. Stock** 200,000 Addi. Piad in Capital 2,400,000 To record Smallport acquisition for $2,600,000 consideration transferred Professional Service Expense 100,000 Cash 100,000 To record as expense of the current period any direct combination costs Salaries & administrative 75,000 Expense A/Payable or Cash 75,000 To record as expense of the current period any indirect combination costs Additional Paid in capital 20,000 Cash 20,000 To record costs to register & issue stock in connection with the Smallport acquisition...
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