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Journal Entries to Record a Business Combination On January 1, 20X2, Frost Company acquire

Journal Entries to Record a Business Combination On January 1, 20X2, Frost Company acquire

Journal Entries to Record a Business Combination

On January 1, 20X2, Frost Company acquired all of TKK Corporation’s assets and liabilities by issuing 24,000 shares of its $4 par value common stock. At that date, Frost shares were selling at $22 per share. Historical cost and fair value balance sheet data for TKK at the time of acquisition were as follows:

Balance Sheet Item

Historical Cost

Fair Value

Cash & Receivables

$ 28,000

$ 28,000

Inventory

94,000

122,000

Buildings & Equipment

600,000

470,000

Less: Accumulated Depreciation

(240,000)

 

Total Assets

$ 482,000

$620,000

Accounts Payable

$ 41,000

$ 41,000

Notes Payable

65,000

63,000

Common Stock ($10 par value)

160,000

 

Retained Earnings

216,000

 

Total Liabilities & Equities

$ 482,000

 

Frost paid legal fees for the transfer of assets and liabilities of $14,000. Frost also paid audit fees of $21,000 and listing application fees of $7,000, both related to the issuance of new shares.

Required

Prepare the journal entries made by Frost to record the business combination.

Roshan kumar 24-Nov-2017

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