What journal entry should National Starch make

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Question - National Starch Corporation entered into a preliminary understanding to be acquired by Unilever Corporation at a price of $70 per share. National Starch subsequently hired Morgan Stanley to assist in the transactions and Morgan Stanley was able to price the deal at $74 per share. Morgan Stanley charged National Starch a fee of $2.2 million for its work.

Assume that all payments were cash and that National Starch shareholders each had a basis of $1 in each share of National Starch stock which they sold to a holding company established by Unilever.

What journal entry would a National Starch shareholder make to record the sale of one share of stock to Unilever's holding company if Morgan Stanley had not been hired and the deal was concluded based on the preliminary understanding?

What journal entry would National Starch shareholder make to record the sale of one share of stock to Unilever's holding company given that Morgan Stanley had been hired and the deal was concluded as describe above?

Based on the Supreme Court's decision in INDOPCO, what journal entry should National Starch make to record the payment to Morgan Stanley?

Reference no: EM133038751

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