Use the same facts as in problem (20), but assume instead that Arturo pays cash of $4,200,000 to acquire Westmont. No stock is issued. Prepare Arturo’s journal entry to record its acquisition of Westmont.
The following book and fair values were available for Westmont Company as of March 1.
Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction. Prepare Arturo’s journal entry to record its acquisition of Westmont.