Reference no: EM133176314
Question - Balance sheet information for Seitz Corporation at January 1, 2011, is summarized as follows:
Current assets $920,000 Liabilities $1,200,000
Plant assets 1,800,000 Capital stock $10 par 800,000
Retained earnings 720,000
$2,720,000 $2,720,000
Seitz's assets and liabilities are fairly valued except for plant assets that are undervalued By $200,000. On January 2, 2011, Pell Corporation issues 80,000 shares of its $10 par Value common stock for all of Seitz's net assets and Seitz is dissolved. Market quotations for the two stocks on this date are:
Pell common: $28
Seitz common: $19
Pell pays the following fees and costs in connection with the combination:
Finder's fee $10,000
Costs of registering and issuing stock 5,000
Legal and accounting fees 6,000
Required -
1. Prepare the journal entry on Pell's books to record the business combination.
2. Show the computation to calculate goodwill.