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:

Profit-Maximizing

A strategy where a firm adjusts production and sale levels to generate the highest profit possible.

Market Structure

The organization and characteristics of a market, including the level of competition, number of producers, and type of products.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period.

Elastic

Describes the responsiveness of demand or supply to changes in price or income.