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
Cash & Receivables
Buildings & Equipment
Less: Accumulated Depreciation
Common Stock ($10 par value)
Total Liabilities & Equities
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.
Prepare the journal entries made by Frost to record the business combination.