Accounting for business combination Quesuoli Wo. Condensed balance sheets for Danny Company and...
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Accounting
Accounting for business combination
Quesuoli Wo. Condensed balance sheets for Danny Company and Santa Company on January 1, 2020, are as follows: Current assets Plant and equipment (net) Total assets Total liabilities Common stock. OMR10 par value Other contributed capital Retained earnings (deficit) Total liabilities and equities Danny OMR 180.000 450.000 630.000 95,000 350,000 125.000 60.000 630.000 Santa OMR 85.000 140,000 225.000 35,000 160,000 53.000 (23.000) 225.000 On January 1, 2020, the stockholders of Danny and Santa agreed to a consolidation. It was agreed that Danny was acquiring Santa. Danny agreed to issue 20,000 shares of its OMR 10 par stock to acquire all the net assets of Santa at a time when the fair value of Danny's common stock was OMR15 per share. On the date of consolidation, the fair values of Santa's current assets and liabilities were equal to their book values. The fair value of plant and equipment was, however, OMR150,000. Danny will incur OMR20,000 of direct acquisition costs and OMR6,000 in stock issue costs. Required: Prepare the journal entries on the books of Danny to record the acquisition of Santa Company's net assets Total: 6 marks
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