Chapter 1 Intercorporate Acquisitions and Investments in Other Entities 41 LO 1-5 P1-34 Journal Entries On January 1, 20X3, Pure Products Corporation issued 12,000 shares of its $10 par value stock to acquire the net assets of Steel Company. Underlying book value and fair value information for the balance sheet items of Steel at the time of acquisition follow: Book Value Fair Value $ 60,000 100,000 115,000 70,000 350,000 Balance Sheet Item Cash Accounts Receivable Inventory (LIFO basis) Land Buildings & Equipment Less: Accumulated Depreciation Total Assets Accounts Payable Bonds Payable Common Stock ($5 par value) Additional Paid-In Capital Retained Earnings Total Liabilities & Equities $ 60,000 100,000 60,000 50,000 400,000 (150,000) $520,000 $ 10,000 200,000 150,000 70.000 90,000 $520,000 $695,000 $ 10,000 180,000 Steel shares were selling at $18 and Pure Products shares were selling at $50 just before the merger announcement. Additional cash payments made by Pure Products in completing the acquisition were Finder's fee paid to firm that located Light Steel Audit fee for stock issued by Pure Products Stock registration fee for new shares of Pure Products Legal fees paid to assist in transfer of net assets Cost of SEC registration of Pure Products shares $10,000 3,000 5,000 9,000 1,000 Required Prepare all journal entries to record the business combination on Pure Products' books