1. X Corp. Acquired 100% of common stock of Y Corp. Paying $ 2 Million in return for 50 Thousand common stock with $ 1 par value. Y Corp. realized $100 Thousand net income and paid $30 Thousand cash dividends. (2.5 marks)

Required: pass basic elimination entries in consolidation work sheet.

Answer:

2. X Corp. Acquired 100% of common stock of Y Corp. X Corp. assumed acquisition expenses as follows (amounts in $)(2.5 marks)

Legal fees 50,000

Accounting fees 30,000

Travel expenses 10,000

Legal fees (stock issue) 20,000

Accounting fees (stock) 15,000

SEC filing fees (stock) 10,000

Prior to the acquisition date, $90,000 have been paid and capitalized to a deferred charges account on the balance sheet. The remaining $45,000 has not been paid or accrued.

Required:

Prepare the journal entry to record the acquisition expenses.

Answer: