Hi kindly answer the question on the attached file. Thank you :) 2PHASE & STOW co.WITH INCOME from COMBINATIONPhase Corporation acquires the net assets of Stow Company in a merger business combination in which Stow Companyis dissolved.The assets and liabilities of Phase & Stow on January 2, xxx, the date pf the merger is as follows:STOW COMPANYBALANCE SHEETPHASE CO.BVsFVsCash600,00050,00050,000Net receivables100,000150,000140,000Inventories120,000200,000250,000Land440,00050,000100,000Buildings- net760,000300,000500,000Equipment- net150,000250,000350,000Patents50,000Investment in STOW CompanyTotal assets2,170,0001,000,0001,440,000Accounts payableNotes payable100,00060,00060,000150,000135,000C/SOrdinary shares, P 10 parShare premium1,500,000500,000APIC300,000200,000Retained earnings270,00090,000Total liabilities & equity2,170,0001,000,000Referring to Case 1, except that Phase Corporation issues 50,000 shares of its P 10 par ordinary share with a marketvalue of P 20 per share, and it also gives a 10% five-year note payable for P 150,000 for the Net Assets of Stow CompanyPhase also paid P 20,000 in direct acquisition costs and P 15,000 stock issuance costs.STEPS IN BUSINESS COMBINATION: UPON ACQUISITION1 Determine the acquisition cost2 Determine the market value of the net assets acquired3 Compare Acquisition COST with MARKET VALUES of Net Assets acquired4 On the acquirer's books, RECORD the Assets acquired (including INCOME from Acquisition) and Liabilities assumed,with a corresponding Credit to the consideration paid.5 Immediately after the business combination, PREPARE the BALANCE SHEET of the ACQUIRER.REQUIREMENTS:IN GOOD FORM!'1. Compute the Acquisition cost2. Compute to Market Values of Net Assets Acquired3. Journal entries upon acquisition'4. Balance Sheet upon acquisition

(1) In Merger and Acquisition Acquition cost = Transaction cost + Consideration paid We have given…

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Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 22PC

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Outlook Inc. merges with Pinnacle Inc. Only Pinnacle remains. Refer to Fact Pattern 31-1. Outlook held rights in certain real property. With regard to these assets, in the merger Pinnacle assumes a. all of Outlook’s assets. b. an amount of assets equal to the ratio of the firms’ pre-merger market values. c. none of Outlook’s assets. d. only those assets acquired after the merger was proposed.
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