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

question 9

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)all of the items listed above are treated as expenses.
• B)all of the items listed above except the cost of registering and issuing the securities are included in the purchase price.
• C)the costs of registering and issuing the securities are deducted from the fair market value of the common stock used to acquire Spot.
• D)only the costs of closing duplicate facilities,the salaries of Polka's employees assigned to the merger,and the costs of the shareholders' meeting would be treated as expenses.

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Definitions:

Negatively Sloped

Describes a downward trend in a graph, indicating an inverse relationship between two variables, such as price and demand.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefit to society from the production and consumption of goods or services.

Producer Surplus

The discrepancy between the price sellers are ready to accept for an item and the price they actually receive.

Equilibrium Price

The cost point where the amount of a product or service consumers want to buy matches the amount available, resulting in a balanced market.