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Under the acquisition method which of the following is true?

Jones Corp issues 100,000 shares of its previously unissued shares of common stock for all of the outstanding stock of Smith and Smith is dissolved. Jones pays for the following costs and expenses related to this acquisition of Smith:

Registering and issuing securities

Accountants' and legal fees

Cost of closing duplicate facilities

Salaries of Jones' employees assigned to the implementation of the merger

Costs of shareholders' meeting to vote on the merger.

Under the acquisition method which of the following statements is correct?

1. All of the items listed above are treated as expenses of the purchase
2. All of the items listed above except the cost of registering and issuing the securities are expensed by the combined entity
3. Costs of registering and issuing the securities increase paid-in capital
4. Accountants' and legal fees would be part of consideration transferred

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Although the FASB for Business Combinations: Applying the Acquisition Method?Joint ...

Solution Summary

The solution answers the question and also provides a link to the FASB which hasn't been issued.

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