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Business Combination

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  P1-43 Comprehensive Business Combination Problem a. Journal entries on the books of Bigtime Industries to record the combination:Merger Expense135!!!  ash135!!!#eferred $tock Issue osts%&!!!  ash%&!!! ash&'!!! (ccounts )ecei*able&515!!In*entor+3,5!!!-ong/erm In*estments105!!!-and1!!!!!)olling $tock3!!!2lant and Euipment&5!!!!!2atents5!!!!!$pecial -icenses1!!!!!#iscount on Euipment /rust 4otes5!!!#iscount on #ebentures5!!!!ood6ill1!,0!!  urrent 2a+ables130&!! Mortgages 2a+able5!!!!! 2remium on Mortgages 2a+able&!!!! Euipment /rust 4otes1!!!!! #ebentures 2a+able1!!!!!!  ommon $tock1'!!!! (dditional 2aidIn apital ommon  &&,'!!! #eferred $tock Issue osts%&!!!  omputation of good6ill7alue of stock issued 891% x 1'!!!!9&5&!!!! ;air *alue of assets acuired9%11&5!! ;air *alue of liabilities assumed810!&&!!;air *alue of net identifiable assets   8&%1!3!!ood6ill9 1!,0!! 1-1  P1-43  8continuedb. Journal entries on the books of < to record the combination:In*estment in Bigtime Industries $tock&5&!!!! (llo6ance for Bad #ebts5!! (ccumulated #epreciation1%!!! urrent 2a+ables130&!!Mortgages 2a+able5!!!!!Euipment /rust 4otes1!!!!!#ebentures 2a+able1!!!!!! #iscount on #ebentures 2a+able%!!!!  ash&'!!! (ccounts )ecei*able&5'!!! In*entor+3'1!!! -ong/erm In*estments15!!!! -and55!!! )olling $tock13!!!! 2lant and Euipment&%&5!!! 2atents1&5!!! $pecial -icenses,5'!! ain on $ale of (ssets and -iabilities11',,!! )ecord sale of assets and liabilities. ommon $tock05!! (dditional 2aidIn apital ommon $tock  %5!! /reasur+ $tock1&!!! )ecord retirement of /reasur+ $tock:= 905!! > 95 x 15!! shares 9%5!! > 91&!!!  905!! ommon $tock5,&5!! (dditional 2aidIn apital ommon  %,55!! (dditional 2aidIn apital )etirement  of 2referred&&!!!)etained Earnings1%1!!!! In*estment in BigtimeIndustries $tock&5&!!!! )ecord retirement of < stock anddistribution of Integrated Industries stock: 95,&5!! > 9!!!!!  905!! 9%,55!! > 95!!!!!  9%5!! 1%1!!!! > 9&&!1!! ? 911',,!! =(lternati*e approaches exist. 1-2  1-3
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