Purchase Method of Accounting for Business Combination - Accounting Assignment Help

Assignment Task :

Purchase Method of Accounting for Business Combination 

Assume on December 31, 2015, ABC Company (the combinee) was merged into XYZ Corporation (the combinor or survivor). Both companies used the same accounting principle for assets, liabilities, revenue, and expenses and both have a December 31 fiscal year. XYZ issued 150,000 shares of its Br 10 par common stock (CFV Br 25 a share) to ABC’s stockholders for all 100,000 issued and outstanding share of ABC’s no par Br 10 stated value common stock. In addition, XYZ paid the following out of pocket costs associated with the business combination.

Required: Prepare general journal entries for the combinor company (XYZ) on December 31, 2015 in order  

1. To record merger with ABC Co, as a purchase.

2. To record payment of out of pocket costs incurred in merger with ABC Co.

3. To record liquidation of company in conjunction with merger with ABC Corporation.

1. Pooling of Interest Method for Business Combination

Assume XYZ Corporation and ABC company merged business combination described in the above purchase accounting method would be accounted for, as a pooling of interests by the following journal entries in ABC Company’s (the survivors) accounting records. Thus, based on the information given under No.1, you are required  

1. To record issuance of 150, 000 shares of Br 10 par common stock in a pooling of interests, merger-type business combination with ABC Company.

2. To record expenses incurred in exchanging stock with ABC Company.

3. To record the assets and liabilities received in a pooling of interests merger with ABC Company.

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