Use the Following Information to Answer the Question(s) Below -In the Business Combination of Polka and Spot
A)the Costs

question 34

Multiple Choice

Use the following information to answer the question(s) below.

Polka Corporation exchanges 100,000 shares of newly issued $1 par value common stock with a fair market value of $20 per share for all of the outstanding $5 par value common stock of Spot Inc. and Spot is then dissolved. Polka paid the following costs and expenses related to the business combination: $\begin{array}{lr}\text { Costs of special shareholders' meeting } & \\\quad \text { to vote on the merger } & \$ 12,000 \\\text { Registering and issuing securities } & 10,000 \\\text { Accounting and legal fees } & 18,000 \\\text { Salaries of Polka's employees assigned } & \\\quad \text { to the implementation of the merger } & 27,000 \\\text { Cost of closing duplicate facilities } & 13,000\end{array}$

-In the business combination of Polka and Spot

• A)the costs of registering and issuing the securities are included as part of the purchase price for Spot.
• B)the salaries of Polka's employees assigned to the merger are treated as expenses.
• C)all of the costs except those of registering and issuing the securities are included in the purchase price of Spot.
• D)only the accounting and legal fees are included in the purchase price of Spot.

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Definitions:

Actual Level

The real, observed state or value of a variable or metric at a given point in time, opposed to theoretical or planned levels.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Performance Reports

Documents that compare actual business results to planned or budgeted figures to evaluate performance.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, used to compare actual performance against what should have occurred at the actual level of activity.