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    Journal Entries to Record a Business Combination

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    On Jan 1, 2002, 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 Historical Cost Fair Value
    Cash and Receivables 28,000 28,000
    Inventory 94,000 122,000
    Buildings and Equipment 600,000 470,000
    Less: Accum 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 and Equities 482,000

    Frost paid legal fees for the transfer of assets and liabilities of $14000, audit fees of $21,000, and listing
    application fees for the new shares of $7,000.

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

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    https://brainmass.com/business/the-accounting-cycle/journal-entries-to-record-a-business-combination-144308

    Solution Summary

    On Jan 1, 2002, 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.

    $2.19

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