Reference no: EM132481103
On January 1, 20X2, Prost Company acquired all of SKK Corporation's assets and liabilities by issuing 25,300 shares of its $6 par value common stock. At that date, Prost shares were selling at $24 per share. Historical cost and fair value balance sheet data for SKK at the time of acquisition were as follows:
Balance Sheet Item Historical Cost Fair Value
Cash & Receivables $21,000 $21,000
Inventory 99,000 107,000
Buildings & Equipment 604,000 454,000
Less:
Accumulated Depreciation (225,000)
Total Assets $499,000 $582,000
Accounts Payable $46,000 $46,000
Notes Payable 81,000 79,000
Common Stock ($10 par value) 161,000
Retained Earnings 211,000
Total Liabilities & Equities $499,000
Prost paid legal fees for the transfer of assets and liabilities of $22,000. Prost also paid audit fees of $24,000 and listing application fees of $12,000, both related to the issuance of new shares.
Required:
Question 1: Record the payment of legal fees
Question 2: Record the costs of issuing stock
Question 3: Record the purchase of SKK Corporation