Pali Corporation Exchanges 200,000 Shares of Newly Issued $10 Par

question 29

Essay

Pali Corporation exchanges 200,000 shares of newly issued $10 par value common stock with a fair market value of $40 per share for all the outstanding $5 par value common stock of Shingle Incorporated,which continues on as a legal entity.Fair value approximated book value for all assets and liabilities of Shingle.Pali paid the following costs and expenses related to the business combination:
Salaries of Pali's employees whose
Required: Prepare the journal entries relating to the above acquisition and payments incurred by Pali,assuming all costs were paid in cash.

---

Definitions:

Outstanding

Refers to shares that are currently owned by investors, including public shareholders, company officials, and insiders.

Earnings Per Share

A financial metric that calculates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of a company's profitability.

Stock Dividend

A distribution of additional shares of a company's stock to its shareholders without any change in ownership percentage.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the overall value of the company does not change.