Miguel Corporation and Forest Company merged as of January 1,20X3.Miguel paid finder's fees of $36,000 and legal fees of $8,000.Miguel also paid audit fees related to the stock issuance of $12,000,stock registration fees of $7,000,and stock listing application fees of $3,000.
-Based on the preceding information,under the acquisition method,what amount relating to the business combination would be expensed?

Question

Quizplus · Accepted Answer

Under the acquisition method, expenses related to the business combination that are directly attributable to the acquisition, such as finder's fees, legal fees, and other professional fees, are expensed as incurred. Therefore, the total amount of expenses that should be expensed is $36,000 + $8,000 + $12,000 + $7,000 + $3,000 = $44,000. Option C is the closest choice to this amount. Options A and B are lower, while option D is significantly higher, so they can be eliminated as possible choices.

Miguel Corporation and Forest Company Merged as of January 1,20X3