Effective December 31 2013 Zintel Corporation proposes

to issue additional #6327

Effective December 31, 2013, Zintel Corporation proposes to issue additional shares of its
common stock in exchange for all the assets and liabilities of Smith Corporation and Platz
Corporation, after which Smith and Platz will distribute the Zintel stock to their stockholders in
complete liquidation and dissolution. Balance sheets of each of the corporations immediately
prior to merger on December 31, 2013, follow. The common stock exchange ratio was
negotiated to be 1:1 for both Smith and Platz.Required:Prepare journal entries on Zintel's books
to record the combination. Assume the following:The identifiable assets and liabilities of Smith
and Platz are all reflected in the balance sheets (above), and their recorded amounts are equal
to their current fair values except for long-term assets. The fair value of Smith's long-term
assets exceed their book value by $20,000, and the fair value of Platz's long-term assets
exceed their book values by $5,000. Zintel's common stock is traded actively and has a current
market price of $15 per share. Prepare journal entries on Zintel's books to record the
combination. (AICPA adapted)View Solution:
Effective December 31 2013 Zintel Corporation proposes to issue additional

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