Chapter 05 Modern Advanced Accountingreview Q Exr
Short Description
Chapter 05 Modern Advanced Accountingreview Q Exr...
Description
CHAPTER 5 BUSINESS COMBINATIONS The title of each problem is followed by the estimated time in minutes required for completion and by a difficulty rating. The time estimates are applicable for students using the partially filled-in working papers. Pr. 5–1
La Salle Corporation (15 Corporation (15 minutes, easy)
Pr. 5–2
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Pr. 5–5 Pr. 5–6
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Journal entries for business combination (acquisition of net assets except cash), with bargain purchase excess. excess. Lionel Corporation Lionel Corporation (20 minutes, easy) Journal entries for business combination (acquisition of net assets) inoling issuance of bonds, bonds, with goodw goodwill ill recogn recogni!ed. i!ed. Wabash Corporation (20 Corporation (20 minutes, easy) "ien #ournal entries for a statutory merger business combination inoling issuance of bonds, prepare #ournal entries entries assuming assuming the the issuance of common common stock. Combinor Corporation Combinor Corporation (20 (20 minutes, easy) Journal entries for business combination inoling the acquisition of net assets, with goodwill recogni!ed. Consol Corporation (20 Corporation (20 minutes, minutes, medium) medium) Journal entries for statutory consolidation, with goodwill recogni!ed. Silva Corporation (30 Corporation (30 minutes, minutes, medium) medium) $rom condensed balance sheets of suriing corporation prior to and subsequent to a statutory merger, reconstruct the issuer%s #ournal entries for the business combination. Solomon Corporation (30 Corporation (30 minutes medium) &repare #ournal entries for statutory merger, under assumption of a business combination inoling a bargain-purchase excess. 'ntercompany receiable and payable are inoled. Value Corporation (20 Corporation (20 minutes, easy) ccounting for business combination inoling acquisition of combinee%s net assets. argain purchase excess excess must be allocated allocated in in accordance accordance with FASB Statement No. 141, 141, *usiness +ombinations. Stave Corporation (50 Corporation (50 minutes, minutes, medium) Journal entries for statutory merger business combination that inoles recognition of goodwill. Coolidge Corporation (40 Corporation (40 minutes, medium) ccounting for a business combination inoling acquisition of net assets, contingent consideration, and bargain-purchase excess. +omputation of and accounting for additional shares of common stock issued to settle contingent consideration. Solo Corporation (80 Corporation (80 minutes, strong) +omputation of historical and pro#ected net income and basic earnings per share for merger business business combinatio combination. n. &ro forma combine combined d balance sheet sheet follow following ing business business combi combination. nation.
ANSWERS TO REVIEW QUESTIONS . .
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bus busin ines esss comb combin inati ation on occ occurs urs whe when n an ent entit ity y acqui acquires res net net asse assets ts that that cons consti titut tutee a busine business ss or acquires interests of one or more other entities and obtains control oer the entity or entities. statutory merger is a business combination that is consummated in accordance with applicable state law. 'n a merger, one corporation the the *surior acquires acquires all the outstanding common stock of one or more other corporations, which are then liquidated. statutory consoidation is McGraw-Hill McGraw-Hill Companies, Inc., 2006 Modern Advanced Accountin, !0"e
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similar to a merger in that it is consummated in accordance with applicable state law and inoles the acquisition of two or more corporations% outstanding common stock. 1oweer, the surior in a consolidation is a new corporation rather than an existing one. 3ne 3ne or bot both h of the the foll follow owin ing g met metho hods ds are are used used to to det determ ermin inee an appr appropr opriat iatee price price to pay pay in in a business business combinatio combination4 n4 +apitali!ation of expected aerage earnings of the combinee at a desired rate of return 5etermination of current fair alue of the combinee%s net assets (including goodwill) The The cons constit titue uent nt com compa pany ny that that issu issues es cash cash,, othe otherr assets assets,, or deb debtt instr instrum umen ents ts in in a busi busine ness ss combination is the combinor. 'n a business combination inoling the issuance of common stock, the combinor generally is the constituent company whose former common stockholder interests either retain or receie the larger portion of the oting rights of the combined enterprise. The follo followi wing ng out-of out-of-po -pocke ckett cost costss are includ included ed in the determ determinat inatio ion n of of the the total total cost cost of the combinee4 (a) &rinting &rinting costs of proxy statement statement mailed to combin combinor%s or%s stockhold stockholders ers (b) 8egal fees fees for negotia negotiating ting the the merger merger (f) +& +& firm%s firm%s fees for adice adice on incom incomee tax aspects of the merger merger The following out-of-pocket costs are offset against paid-in capital in excess of par of combinor common stock issued in the merger4 (c) +& +& firm%s firm%s fees for auditi a uditing ng financial financial statements statements in 9:+ registration registration statement coering coering shares of common stock issued in the merger (d) &rinting &rinting costs for common common stock certificates certificates issued in the the merger merger (e) 8egal fees fees for 9:+ registration registration statement statement coering coering shares of common common stock stock issued in the the merger !ood"i is the alue assigned to the expectation of aboe-aerage or superior earnings from the identifiable assets of a combinee. 'n accounting for a business combination, goodwill is the excess of the total cost of the combinee oer the current fair alues assignable to its identifiable net assets. #egati$e good"i is a residual deferred credit in a business combination in which the cost of the combinee is less than the current fair alues assignable to the combinee%s identifiable net assets. The deficiency first is allocated pro rata to specified assets< any amount remaining after reducing the alues of these assets to !ero is recogni!ed as an extraordinary gain. %ontingent consideration is additional cash, other assets, or securities that may be issuable in the future contingent on specified future eents or transactions, such as a specified leel of earnings, or a designated market price for a debt or an equity security issued to effect the business combination. The total total cost cost of of a combin combinee ee in a busin business ess combin combinatio ation n is is allo allocate cated d first first to the iden identif tifiabl iablee assets assets acquired and liabilities assumed, based on their current fair alues. ny excess of total cost oer the amounts assigned is recogni!ed as goodwill. ny excess of amounts assigned oer total cost is applied pro rata to reduce the amounts otherwise assignable to certain assets specified by the $9. Preac&uisition Preac&uisition contingencies are contingent assets (other than potential income tax benefits of a loss carryforward), contingent liabilities, or contingent impairments of assets that existed prior to completion of a business combination. The follo followi wing ng comb combin inee ee intang intangibl iblee assets assets other other than goo goodw dwill ill are are gien gien accoun accountin ting g recogn recogniti ition on in in a business business combinatio combination4 n4 ssets ssets arising from contractual or legal legal rights, rights, such as patents, copyrights, copyrights, and franchises. 3ther assets that are separable from the combinee entity and can be sold, licensed, exchanged, and the like, such as customer lists and unpatented technology.
SOLUTIONS TO EXERCISES EXERCISES '. 5–1
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'. 5–2
Journal entries for 9al +orporation, Jan. 2, >>74 'nestment in in ?el +ompany +ommon 9tock (27,>>> x @>) +ommon 9tock (27,>>> x @) &aid-in +apital in :xcess of &ar 'nestment in ?el +ompany +ommon 9tock &aid-in +apital in :xcess of &ar +ash
27,>>> ;;7,>>> 6>,>>> />,>>> >,>>>
+urrent ssets 3ther ssets "oodwill +urrent 8iabilities 8ong-Term 5ebt 'nestment in ?el +ompany +ommon 9tock '. 5–3
/>>,>>>
>,>>> 07>,>>> =>,>>> 0>,>>> 6>,>>> /6>,>>>
+omputation of amount of goodwill goodwill in the business combination of ?aster +orporation and "eo +ompany, ?ar. 2, >>74 Total cost to ?aster of "eo%s net assets except cash (@/>>,>>> A @>>,>>>) 8ess4 +urrent fair alue of "eo%s identifiable net assets4 3ther current assets &lant ssets +urrent liabilities 8ong-term debt mount of goodwill
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@0>>,>>> @6>,>>> =>,>>> (0>,>>>) (=>,>>>)
/=>,>>> @ >,>>>
McGraw-Hill Companies, Inc., 2006 0>
'. 5–4
'. 5–5
Journal entries for +ombinor +ompany, Jan. 2, >>74 'nestment in Bet ssets of +ombinee +ompany 5iscount on ;C onds &ayable ;C onds &ayable
;7,7/ /6,/62
'nestment in Bet ssets of +ombinee +ompany ond 'ssue +osts +ash
0>,>>> >,>>>
+urrent ssets &lant ssets 3ther ssets "oodwill +urrent 8iabilities 8ong-Term 5ebt 'nestment in Bet ssets of +ombinee +ompany Journal entries for +ombinor +ompany, ?ar. 2, >>74
2>,>>> ;0>,>>> >,>>> 07,7/
'n 'nestm estmen entt in in Bet Bet ss sset etss o off +om +ombi bin nee +om +ompa pany ny (>> (>>,> ,>>> >> x @7) @7) +ommon 9tock (>>,>>> x @) &aid-in +apital in :xcess of &ar
7>>, 7>>,>> >>> >
'nestment in Bet ssets of +ombinee +ompany &aid-in +apital in :xcess of &ar +ash +urrent ssets &lant ssets 3ther ssets "oodwill +urrent 8iabilities 8ong-Term 5ebt 'nestment in Bet ssets of +ombinee +ompany '. 5–6
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=>,>>>
>>,>>> 2>>,>>> />7,7/
>>,>>> 6>>,>>> />,>>> 7>,>>> >,>>> ;>,>>> 60>,>>> 7>,>>> >,>>> 0>,>>> ;>,>>> 7/>,>>>
Journal entries for yers +orporation, ?ay 2, >>74 'nestment in Bet ssets of 9ellers +ompany +ash
7;>,>>>
'nestment in Bet ssets of 9ellers +ompany +ash
;>,>>>
3ther +urrent ssets &lant ssets 'ntangible ssets "oodwill 8iabilities 'nestment in Bet ssets of 9ellers +ompany
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/>>,>>>
7;>,>>> ;>,>>> 2>>,>>> /0>,>>> 2>,>>> 2>,>>> ;>,>>> ;>,>>>
McGraw-Hill McGraw-Hill Companies, Inc., 2006 Modern Advanced Accountin, !0"e
'. 5–7
'. 5–8
Journal entries for cquirer +orporation, 9ept. ;, >>74 'nestment in Bet ssets of 5isposer +ompany +ash
;>,>>>
'nestment in Bet ssets of 5isposer +ompany +ash
>,>>>
;>,>>> >,>>>
3ther +urrent ssets &lant ssets D@7>,>>> E (@>,>>> x 7F>)G 'ntangible ssets D@7>,>>> E (@>,>>> x 7F>)G 5iscount on 8ong-Term 5ebt (@;>,>>> E @7>,>>>) +urrent 8iabilities 8ong-Term 5ebt 'nestment in Bet ssets of 5isposer +ompany Journal entries for +ombinor +ompany, 5ec. 2, >>74 'nestment in +ombinee +ompany +ommon 9tock (>>,>>> x @7) +ommon 9tock (>>,>>> x @) &aid-in +apital in :xcess of &ar
>>,>>> 6>>,>>> />,>>> 7>,>>> >,>>>
+urrent ssets &lant ssets 3ther ssets "oodwill +urrent 8iabilities 8ong-Term 5ebt 'nestment in +ombinee +ompany +ommon 9tock Journal entries for +ombinor +ompany, 9ept. 6, >>74 'nestment in +ombinee +ompany +ommon 9tock (>>,>>> x @2>) +ommon 9tock (>>,>>> x @) &aid-in +apital in :xcess of &ar
>>,>>> 6>>,>>> 6>,>>> />,>>> 0>,>>> ;>,>>> 7/>,>>>
2,>>>,>>> >>,>>> ,=>>,>>>
'nestment in +ombinee +ompany +ommon 9tock &aid-in +apital in :xcess of &ar +ash
2>,>>> 7>,>>> 0>,>>>
+urrent ssets &lant ssets 3ther ssets Hesearch and 5eelopment :xpense "oodwill +urrent 8iabilities 8ong-Term 5ebt 'nestment in +ombinee +ompany +ommon 9tock
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=>,>>> ;>,>>> />,>>>
7>>,>>>
'nestment in +ombinee +ompany +ommon 9tock &aid-in +apital in :xcess of &ar +ash
'. 5–9
>,>>> 6,7>> 6/,7>> >,>>>
>>,>>> />>,>>> >>,>>> 6>>,>>> ,2>,>>> >>,>>> 2>>,>>> 2,2>,>>>
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'. 5–10
Journal entries for ragg +orporation, +orpor ation, $eb. 0, >>74 'nestment in Bestor +ompany +ommon 9tock (;>>,>>> x @) +ommon 9tock (;>>,>>> x @) &aid-in +apital in :xcess of &ar 'nestment in Bestor +ompany +ommon 9tock +ash +urrent ssets &lant ssets 3ther ssets "oodwill +urrent 8iabilities 8ong-Term 5ebt &remium on 8ong-term 5ebt 'nestment in Bestor +ompany +ommon 9tock
'. 5–11
'nestment in ?axim +ompany +ommon 9tock &aid-in +apital in :xcess of &ar +ash +urrent ssets &lant ssets 3ther ssets "oodwill +urrent 8iabilities 'nestment in ?axim +ompany +ommon 9tock
'nestment in +ombinee +ommon 9tock &aid-in +apital in :xcess of &ar +ash +urrent ssets &lant ssets "oodwill +urrent 8iabilities 8ong-term 5ebt 'nestment in +ombinee +ompany +ommon 9tock
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0,>>> 0,>>> 7>,>>> ,>7>,>>> 2>,>>> >0,>>> 2>>,>>> 6>>,>>> 0>,>>> ,>0,>>>
,6>>,>>> 0>>,>>> ,;>>,>>> 2>,>>> 6>,>>> />,>>> 7>>,>>> ,7>>,>>> >>,>>> 72>,>>> 2>>,>>> ,62>,>>>
Journal entries for +ombinor +orporation, +orpora tion, ug. 2, >>74 'nestment in +ombinee +ommon 9tock (>>,>>> x @>) +ommon 9tock (>>,>>> x @) &aid-in +apital in :xcess of &ar
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;>>,>>> ;>>,>>>
Journal entries for 9orrel +orporation, +orpor ation, 5ec. 2, >>74 'nestment in ?axim +ompany +ommon 9tock (0>>,>>> x @2) +ommon 9tock (0>>,>>> x @) &aid-in +apital in :xcess of &ar
'. 5–12
,>>,>>>
,>>>,>>> >>,>>> ,=>>,>>> >>,>>> 7>,>>> 7>,>>> ;>>,>>> ,0>>,>>> >>,>>> 6>>,>>> ,>>>,>>> ,>>,>>>
McGraw-Hill McGraw-Hill Companies, Inc., 2006 Modern Advanced Accountin, !0"e
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a. 9ullian +orporation separate net income for >>7 dd4 ?ears 5iision net income, two months ended 5ec. 2, >>7 9ullian total net income for >>7
@ 7>>,>>>
#. 9ullian +orporation net income for >>7 Ieighted-aerage number of shares of 9ullian common stock outstanding during >>74 >>,>>> shares x year 7>,>>> shares x F; year 9ullian basic earnings per share for >>7 (@77>,>>> ÷ >0,222)
@ 77 7 7>,>>>
7>,>>> @ 77>,>>>
>>,>>> 0,222
@.;6
retained earnings, 5e 5ec. 2 2, > >>7 c. 9ullian +orporation separate re dd4 ?ears 5iision net income, two months ended 5ec. 2, >>7 9ullian retained earnings, 5ec. 2, >>7 '. 5–14
>0,222
@,>0>,>>> 7>,>>> @,2>,>>>
Journal entry for Tucker +orporation, 5ec. 2, >>;4 &aid-in +apital in :xcess of &ar (;>,>>> x @) +ommon 9tock to be 'ssued for +ontingent +onsideration To record additional shares of common stock to be issued under terms of 5ec. 2, >>7, acquisition of net assets of 8oring +ompany, as follows4 Hequi Hequired red alu aluee of comm common on stock stock issue issued d in acqui acquisi siti tion on @,;>> @,;>>,>> ,>>> > 8ess4 ?arket alue of common stock, 5ec. 2, >>; (>>,>>> x @>) ,>>>,>>> ?arke ?arkett al alue ue of addi additi tion onal al com common stoc stock k to to be issu issued ed @ ;>>,> ;>>,>>> >> Bumber of additi additional onal shares of of common common stock stock to be ;>,>>> issued (@;>>,>>> ÷ @>)
>,>>> >,>>>
CASES 9olamente +orporation%s accounting for the out-of-pocket costs of the business combination with ?ika +ompany does not comply with generally accepted accounting principles. 5irect out-of-pocket costs incurred by a combinor in a combination are included in the total cost of the combinee. 8egal fees and other out-of-pocket costs of the combination paid by ?ika on behalf behalf of 9olamente 9olamente should should hae been been recogni! recogni!ed ed as an account receiabl receiablee by ?ika and an account payable by 9olamente< legal and other expenditures on its own behalf with respect to the combination with 9olamente should hae been recogni!ed as expenses by ?ika. %ase 5–2 T34 The oard of 5irectors, 9oftware +ompany $H3?4 , , +ontroller +ontroller 5T:4 9KJ:+T4 &ossible Hecognition of "oodwill in &roposed cquisition of &art of a &roduct 8ine of ?idge +ompany "oodwill is not to be recogni!ed in the sub#ect proposed acquisition, despite pro#ections that the acquisition cost will exceed the current fair alue of identifiable net assets to be acquired. "oodwill "oodwill is recogni!ed only in the acquisition of an entire entity in a business combination< it traditionally is associated with the acquired entityLs superior earnings compared with other enterprises in the industry. 'f the portion of the acquisition cost that exceeds the current fair alue of the ?idge +ompany identifiable net assets to be acquired cannot be assigned to sometimes-oerlooked intangible assets such as an agreement not to compete or a customer %ase 5–1
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list, it must be recogni!ed as a loss of the accounting period in which the acquisition of the assets is completed. %ase 5–3 The #ournal entry prepared by 9hane +orporationLs controller to record the transaction inoling ?erlo +ompany is incorrect in its recognition of common stock to be issued, because the contingency had not been resoled on the date of the business combination. consequence consequence of this error is the inappropriate recognition of goodwill and the oerstatement of one or more assets other than goodwill. 8ikewise, the #ournal entry to record the transaction inoling ?erlo 'ndustries inappropriately recogni!es contingent consideration4 the payable to "eorge ?erlo amount. :en if it were appropriate to record such payable, the @7>,>>> amount would hae to be discounted to its present alue on $ebruary 0, >>7, at an appropriate fair interest rate. gain, the goodwill of @7>,>>> should not hae been recogni!ed, and one or more assets should be written down for the @>>,>>> bargain purchase excess (@27>,>>> E @7>,>>> M @>>,>>>). 3ne other point should be noted with respect to the controller%s #ournal entry for the ?erlo 'ndustries, 'nc., transaction. The controller should consider whether "eorge ?erlo%s agreement not to compete with 9hane +orporation is an intangible asset with a current fair alue on the date of the combination. 'f so, part of the @7>,>>> cost should be debited to the Bon-+ompete greement ledger account and amorti!ed oer the fie-year term of the agreement. %ase 5–4 'n the business combination of $rank :lectronics, 'nc., and 8ester :nterprises, 'nc., $rank :lectronics clearly is the combinor. fter the issuance of ,>>> shares of 8ester :nterprises common stock, Hobert $rank would own 76.7C D,>>> ÷ (>,>>> A ,>>>) M >.767G of 8ester :nterpriseLs outstanding common common stock. The 7,>>> shares of 8ester :nterpriseLs unissued common stock to which "eorge 8ester had subscribed are not outstanding< further, many accountants beliee that the balance of the +ommon 9tock 9ubscriptions Heceiable account should be offset against the balance of the +ommon 9tock 9ubscribed account< for 8ester :nterprises, 'nc.< this would result in ero paid-in capital from stock subscriptions. ccordingly, een though 8ester :nterprises, 'nc., is the survivor in in the proposed merger with $rank :lectronics, 'nc., the latter is the combinor, and its net assets must be recogni!ed at !arrying value in the post-merger balance sheet of 8ester :nterprises. further problem in the merger as proposed was the assignment of a @6> per share fair alue for the ,>>> shares of 8ester :nterprises common stock to be issued to Hobert $rank. ecause 8ester :nterprises is a *shell corporation with no operating assets, the fair alue of the ,>>> shares to be issued to Hobert $rank should not exceed the @=.7> D(@0>,>>> A @,>>> A @6,>>>) ÷ >,>>> M @=.7>G !arrying amount (book (book alue) per share of the >,>>> shares of outstanding common stock of 8ester :nterprises, 'nc. This issue is moot, howeer, gien that $rank :lectronics, not 8ester :nterprises, is the combinor in the merger of the two corporations. ag ree with the $9Ls conclusion that core goodwill meets meets the $9Ls $9Ls definition %ase 5–5 9tudents who agree of asset might might be persuaded by the analysis of the components of !ore good"ill (as (as defined in paragraph >7 of FASB Statement No. 141. $ew accountants would quarrel with a definition of goodwill that encompassed the fair alue of the *going concern element of the combineeLs existing business and the fair alues of the expected synergies and other benefits of the business combination. 9tudents who disagree with the $9Ls conclusion that core goodwill meets the $9Ls definition of asset might might not be persuaded that the $9Ls discussion of probable future economic benefits of goodwill in paragraphs through 6 of FASB Statement No. 141 clearly supports the conclusion that goodwill has such benefits. Thus, FASB Statement No. 141 likely will not still the controersy of recognition r ecognition of goodwill goodwill as an asset .
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McGraw-Hill McGraw-Hill Companies, Inc., 2006 Modern Advanced Accountin, !0"e
7 ?inutes, :asy La Salle Corporation
Pr. 5! La Salle Corporation "o#rnal Entrie$
20 05 Jan 31 Investment in Net Assets of De Soto Company Cash To record ac!isition of net assets of De Soto Company 31 Investment in Net Assets of De Soto Company
5 4 0 0 0 0 5 4 0 0 0 0
" 0 0 0 0
Cash To record payment of costs inc!rred in ac!isition of
" 0 0 0 0
net assets of De Soto Company# 31 $t $ther C!rrent Assets %&ant assets '()*4+000 , -(30+000 . 0#/2 Intani&e Assets '(*"+000 , -(30+000 . 0#0)
3 0 0 0 0 0 ) 4 " 4 0 0 * 3 " 0 0
iai&ities Investment in Net Assets of De Soto Company
" 2 0 0 0 0
-(540+000 ("0+000 To a&&ocate tota& cost of net assets ac!ired to
" 0 0 0 0 0
identifia&e net assets+ 6ith e.cess of c!rrent fair va&!e of the net assets over over tota& cost prorated to nonc!rrent assets in the ratio of )*47*"+ or /287)8# -Income ta. effects are disrearded#
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> ?inutes, :asy Lionel Corporation
Pr. 5% Lionel Corporation "o#rnal Entrie$
20 05 A! 31 Investmen Investmentt in Net Assets of Coop Cooper er Compan Company y '-(1+000+000 . 0#25)41/ -(50+000 . 10#5/4014 Disco!nt on 9onds %aya&e
* ) ) 1 2 0 2 1 1 ) ) 0
9onds %aya&e To record ac!isition of net assets of Cooper Co# 31 9ond Iss!e Costs
1 0 0 0 0 0 0
" 0 0 0 0
Investment in Net Assets of Cooper Company Cash
4 0 0 0 0 1 0 0 0 0 0
To record payment of costs inc!rred in ac!isition of net assets of Cooper Company# 31 C!rrent Assets %&ant Assets
2 2 0 0 0 0 * 0 0 0 0 0
Intani&e Assets Disco!nt on on:Term Det -(200+000 , (1/0+000
/ 0 0 0 0 1 0 0 0 0
;ood6i&&
) ) 1 2 0 C!rrent iai&ities on:Term Det
) 0 0 0 0 2 0 0 0 0 0
Investment in Net Assets of Cooper Co# -(*))+120 (40+000
) 2 ) 1 2 0
To a&&ocate tota& cost of net assets investment to identifia&e assets and &iai&ities+ 6ith remainder remainder to ood6i&&# Amo!nt Amo!nt of ood6i&& is comp!ted as fo&&o6s7 f o&&o6s7 Tota& cost of investment ()2)+120 ess7 C!rrent fair va&!e of identifia&e net assets -(1+010+000 , (2*0+000 Amo!nt of ood6i&& -income ta. effects are disrearded#
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*40+000 ( ))+120
McGraw-Hill McGraw-Hill Companies, Inc., 2006 Modern Advanced Accountin, !0"e
> ?inutes, :asy Wa&a$' Corporation
Pr. 5( Wa&a$' Corporation "o#rnal Entrie$
20 05 Dec 31 Inv Investme tment in in Indi ndiana Company Common Stoc< -1+000+000 . (10 Common Stoc< 31 Investment in Indiana Company Common Stoc<
10 0 0 0 0 0 0 10 0 0 0 0 0 0 1 5 0 0 0 0
Common Stoc< Cash
5 0 0 0 0
31 C!rrent Assets
3 * 0 0 0 0 0
%&ant Assets '(/+/00+000 , -(10+250+000 , (10+150+000 C!rrent iai&ities
2 0 0 0 0 0
/ ) 0 0 0 0 0 3 3 5 0 0 0 0
Investment in Indiana Company Common Stoc<
10 1 5 0 0 0 0
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> ?inutes, :asy Co)&inor Corporation
Pr. 5* Co)&inor Corporation "o#rnal Entrie$
20 05 $ct $ct 31 Inv Investm estmen entt in in Net Net Ass Assets ets of of Com Com ine inee Com Comp pany -100+000 . (13 Common Stoc< -100+000 . (10
1 3 0 0 0 0 0 1 0 0 0 0 0 0
%aid:in Capita& in =.cess of %ar To record ac!isition of net assets of Cominee Company 31 Investment in Net Assets of Cominee Company %aid:in Capita& in =.cess of %ar Cash
3 0 0 0 0 0
1 ) 0 0 0 0 1 2 0 0 0 0 3 0 0 0 0 0
To record payment of costs inc!rred in ac!isition of net assets of Cominee Company# Company# ea&+ acco!ntin+ and finder>s fees in connection 6ith the ac!isition are recorded as an investment cost? other o!t:of:poc ?inutes, :asy Val#e Corporation
Pr. 5 Val#e Corporation "o#rnal Entrie$
20 05 Apr 1 Investmen Investmentt in Net Assets of =dar =dar Compa Company ny '-50+000 . (14 (225+000 Cash
/ 2 5 0 0 0 2 2 5 0 0 0
Common Stoc< -50+000 . (14 To record iss!ance of cash and 50+000 shares of
* 0 0 0 0 0
common stoc< for net assets of =dar Company# 1 Investmen Investmentt in Net Assets of =dar =dar Compa Company ny -acco! -acco!nt: nt: in+ &ea&+ and finders> fees Common Stoc< -iss!e costs Cash To record payment of o!t:of:poc ?inutes, ?edium Sta+e Corporation
Pr. 5/ Sta+e Corporation "o#rnal Entrie$
20 05 Apr 30 Investmen Investmentt in @o&o @o&o Compan Company y Common Common Stoc<
20 0 0 0 0 0 0
Cash 108 9onds %aya&e
3 1 0 0 0 0 0 1" / 0 0 0 0 0
To record merer 6ith @o&o Company as a p!rchase# 30 Investment in @o&o Company Common Stoc< 9ond Iss!e Costs Cash
1 5 0 0 0 1 0 0 0 0 2 5 0 0 0
To record payment of o!t:of:poc
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