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What is the total effect of the acquisition transaction

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Question - On December 31, Year 1, Damon purchased 100% of the outstanding common stock of Smith Co. in a business combination by issuing 20,000 shares of its $1 par common stock (fair value $14 per share), and paying cash of $30,000. Damon also incurred $23,000 in direct acquisition costs for due diligence professional services.

On the acquisition date, the following amounts are relevant to Smith Co.:

Book value Fair value

Assets $140,000 $414,000

Liabilities -75,000 -67,000

Ignoring income tax effects, what is the total effect of the acquisition transaction, including the related financing transaction, on the Year 1 net income reported by Damon Co. on its consolidated income statement? (Enter a gain as a positive number and a loss as a negative number.)

Reference no: EM132652643

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