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Par Co. Incurred the following costs in order to acquire all of the shares of Sub Co.: Purchase price (paid in cash) $500,000 Legal fees
Par Co. Incurred the following costs in order to acquire all of the shares of Sub Co.: Purchase price (paid in cash) $500,000 Legal fees $10,000 The business combination agreement states that if the earnings of Sub Co. exceed an average of $2.50 per share over the next two years, Par Co. will make an additional cash payment of $100,000 to the former shareholders of Sub Co. Recent earnings per share for Sub Co. have averaged $175. On the date of the business combination, it is not known whether the earnings target will be met. On the date of the combination, the acquisition cost would be calculated as: Multiple Choice $500,000 $510,000 $610,000 $600,000
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