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5-4 On July 31, Year 10. Pell Corporation issued 20.000 shares of its $2 par common stock (current fair value $10 a share) for all 5,000 shares of outstanding $5 par common stock of Swift Company, which is to remain a separate corporation. Out-of-pocket costs of the business combination, paid by Pell on July 31, Year 10. are shown below: Finder's and legal fees related to business combination Costs associated with SEC registration statement for Pell common stock Total out-of-pocket costs of business combination The constituent companies' balance sheets on July 31, Year 10, prior to the business combination, follow: Current assets Plant assers (net) Goodwill Total assets PELL CORPORATION AND SWIFT COMPANY Separate Balance Sheets July 31, Year 10 Assets Pell Corporation Current liabilities Long-term debt Common stock, $2 par Common stock, $5 par Paid-in capital in excess of par Retained earnings. Total liabilities & stockholders' equity $ 800,000 2,400,000 $3.200.000 Llabilities & Stockholders Equity $ 400,000 1,000,000 800,000 $20.000 10,000 $30.000 400,000 600,000 $3.200,000 Swift Company $150,000 300,000 20,000 $470.000 $120,000 200,000 25,000 50,000 75,000 $470.000 Swift's goodwill resulted from its July 31. Year 4, acquisition of the net assets of Solo Company. Swift's assets and liabilities having July 31, Year 10, current fair values differ- ent from their carrying amounts were as follows: Inventories.. Plant assets (net) . . . Long-term debt . . . . Carrying amounts $ 60,000 300,000 200,000 Current fair values $ 65,000 340,000 190,000 There were no intercompany transactions prior the business combination. and there was no contingent consideration in connection with the combination. Instructions a Prepare Pell Corporation's journal entries on July 31. Year 10, to record the business combination with Swift Company as a purchase. b Prepare the working paper elimination (in journal entry form) and the related working paper for consolidated balance sheet of Pell Corporation and subsidi- ary on July 31, Year 10. Balances in the working papers should reflect the jour- nal entries in a. Disregard income taxes. 5-4 On July 31, Year 10. Pell Corporation issued 20.000 shares of its $2 par common stock (current fair value $10 a share) for all 5,000 shares of outstanding $5 par common stock of Swift Company, which is to remain a separate corporation. Out-of-pocket costs of the business combination, paid by Pell on July 31, Year 10. are shown below: Finder's and legal fees related to business combination Costs associated with SEC registration statement for Pell common stock Total out-of-pocket costs of business combination The constituent companies' balance sheets on July 31, Year 10, prior to the business combination, follow: Current assets Plant assers (net) Goodwill Total assets PELL CORPORATION AND SWIFT COMPANY Separate Balance Sheets July 31, Year 10 Assets Pell Corporation Current liabilities Long-term debt Common stock, $2 par Common stock, $5 par Paid-in capital in excess of par Retained earnings. Total liabilities & stockholders' equity $ 800,000 2,400,000 $3.200.000 Llabilities & Stockholders Equity $ 400,000 1,000,000 800,000 $20.000 10,000 $30.000 400,000 600,000 $3.200,000 Swift Company $150,000 300,000 20,000 $470.000 $120,000 200,000 25,000 50,000 75,000 $470.000 Swift's goodwill resulted from its July 31. Year 4, acquisition of the net assets of Solo Company. Swift's assets and liabilities having July 31, Year 10, current fair values differ- ent from their carrying amounts were as follows: Inventories.. Plant assets (net) . . . Long-term debt . . . . Carrying amounts $ 60,000 300,000 200,000 Current fair values $ 65,000 340,000 190,000 There were no intercompany transactions prior the business combination. and there was no contingent consideration in connection with the combination. Instructions a Prepare Pell Corporation's journal entries on July 31. Year 10, to record the business combination with Swift Company as a purchase. b Prepare the working paper elimination (in journal entry form) and the related working paper for consolidated balance sheet of Pell Corporation and subsidi- ary on July 31, Year 10. Balances in the working papers should reflect the jour- nal entries in a. Disregard income taxes

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