1-29 - P1-29 Journal Entries to Record a Business...

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Unformatted text preview: P1-29 Journal Entries to Record a Business Combination Journal entries to record acquisition of TKK net assets under purchase treatment: (1) Deferred Merger Costs Cash Record payment of legal fees. (2) Deferred Stock Issue Costs Cash Record costs of issuing stock. (3) Cash and Receivables Inventory Buildings and Equipment Goodwill Accounts Payable Notes Payable Common Stock (24,000 x $4) Additional Paid-In Capital * Deferred Merger Costs Deferred Stock Issue Costs Record purchase of TKK Corporation. 14,000 14,000 28,000 28,000 28,000 122,000 470,000 26,000 41,000 63,000 96,000 404,000 14,000 28,000 * [24,000 x ($22 - $4)] - $28,000 = $404,000 Computation of goodwill Values of shares issued ($22 x 24,000) Legal fees Total purchase price Fair value of net assets acquired ($620,000 - $104,000) Goodwill Computation of additional paid-in capital Number of shares issued Issue price in excess of par value ($22 - $4) Total Less: Deferred stock issue costs Increase in additional paid-in capital 24,000 x $18 $432,000 (28,000) $404,000 $528,000 14,000 $542,000 (516,000) $ 26,000 ...
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This note was uploaded on 04/18/2008 for the course ACCT consol taught by Professor Staff during the Spring '06 term at Oklahoma State.

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