On December 31, 2019, Manama Corporation issued 90,000 shares of its no-par, no-stated-value common stock (current fair value $14 a share) for 36,000 shares of the outstanding $10 par common stock of Bahrain Company. The $100,000 out-of-pocket costs of the business combination paid by Manama on December 31, 2019, were allocable as follows: 45% to finders, legal, and accounting fees directly related to the business combination: 55% to the SEC registration statement for Manamas common stock issued in the businesses combination. There was no contingent consideration.

Immediately prior to the business combination, separate balance sheets of the constituent companies were as follows:

MANAMA CORPORATION AND BAHRAIN COMPANY

Separate Balance Sheets (prior to business combination)

December 31, 2019

Manama Bahrain Assets

Cash $ 200,000 $ 100,000

Trade accounts receivable (net) 400,000 200,000

Buildings (net) 600,000 300,000

Land (net) 1,300,000 1,000,000

Total assets $ 2,500,000 $ 1,600,000

Liabilities and Stockholders Equity

Current liabilities $ 800,000 $ 400,000

Long-term debt 100,000

Common stock, no par or stated value 1,200,000

Common stock, $10 par 400,000

Retained earnings 500,000 700,000

Total liabilities and stockholders equity $ 2,500,000 $ 1,600,000

Current fair values of Bahrains identifiable net assets differed from their carrying amounts as follows:

Buildings	$ 250,000
Land	$ 1,300,000

Instructions:

1. Prepare journal entries for Manama Corporation on December 31, 2017, to record the business combination with Bahrain Company. (6 marks).

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