Acc407 Modern Advanced Accounting: P5-4 The balance sheet of Combinee Company

Acc407 Modern Advanced Accounting
Problem 5.4:
The balance sheet of Combinee Company on October 31, 2005, was as follows:
Combinor Corporation’s board of directors established the following current fair values for Combinee’s identifiable net assets other than cash:
Other current assets 500,000 (+80,000)
Plant assets (net) 1,000,000 (+80,000)
Current liabilities 180,000
Long-term debt 240,000 (-10,000)
Accordingly, on October 31, 2005, Combinor issued 100,000 shares of its $10 par (current fair value $13) common stock for all the net assets of Combinee in a business combination. Also on October 31, 2005, Combinor paid the following out-of-pocket costs in connection with the combination:
Finder’s fee, accounting fees, and legal fees to affect combination 180,000
Costs associated with SEC registration statement 120,000
Total out-of-pocket costs of business combination 300,000

Prepare journal entries for Combinor Corporation on October 31, 2005, to record the business combination with Combinee Company. (Disregard income taxes.)
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