Question

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:costs of special shareholders' meeting to vote on the merger $12,000registering and issuing securities 10,000accounting and legal fees 18,000salaries of polka's employees assigned to the implementation of the merger 27,000cost of closing duplicate facilities 13,000in the business combination of polka and spot,

Answer 1

The total cost of the business combination between Polka Corporation and Spot Inc. amounts to $80,000 ($12,000 + $10,000 + $18,000 + $27,000 + $13,000).

Step-by-step explanation:

The business combination between Polka Corporation and Spot Inc. involves various costs and expenses:

1. Costs of special shareholders' meeting to vote on the merger: $12,000

2. Registering and issuing securities: $10,000

3. Accounting and legal fees: $18,000

4. Salaries of Polka's employees assigned to the implementation of the merger: $27,000

5. Cost of closing duplicate facilities: $13,000

To find the total cost of the business combination, add up all these expenses:

$12,000 + $10,000 + $18,000 + $27,000 + $13,000 = $80,000

These costs and expenses are essential in the process of combining Polka Corporation and Spot Inc. The costs of the special shareholders' meeting cover the expenses incurred for seeking approval for the merger. Registering and issuing securities entail costs associated with issuing new stocks. Accounting and legal fees involve the expenses for professional services availed during the merger process. Salaries allocated to employees for merger implementation and the cost of closing duplicate facilities are part of the operational expenses associated with the integration of both entities.

In summary, the total expenses incurred by Polka Corporation in the process of combining with Spot Inc. amount to $80,000, encompassing various essential costs necessary for the successful merger and dissolution of Spot Inc.