The account balances of Ferengi Company and Borg Company as of December 31 are in the accompanying Excel spreadsheet along with the fair values of Borgs assets and liabilities.

Additional financial information:

On December 31, Ferengi issues 50,000 shares of its $20 par value common stock for all of the outstanding shares of Borg Company.

In creating this combination, Ferengi pays $10,000 in stock issue costs and $20,000 in accounting and legal fees.

Ferengis stock has a fair value of $34 per share.

Prepare the necessary journal entries if Ferengi dissolves Borg so that Borg is no longer a separate legal entity.

Assume instead that Borg will retain separate legal incorporation and maintain its own accounting system.

i.Prepare the necessary journal entries on the acquisition date.

ii.Prepare a schedule showing the allocation of the difference between the book values and fair values of Borgs assets and liabilities.

iii.Prepare a worksheet to consolidate the accounts of the two companies on the acquisition date, 12/31.

Now assume that Ferengis stock has a fair value of $28 per share and that Borg will retain separate legal incorporation and maintain its own accounting system.

i.Prepare the necessary journal entries on the acquisition date.