Please do not give solution in image format & Correct answer thank You In January 2005, Pinch Corporation, a chain of discount stores, began a program of businesscombinations with its principal suppliers. On May 31, 2005, the close of its fiscal year, Pinch paid$8,500,000 cash and issued 100,000 shares of its common stock (current fair value $20 a share) for all10,000 outstanding shares of common stock of Silver Company. Silver was a furniture manufacturerwhose products were sold in Pinch's stores. Total n stockholders' equity of Silver on May 31, 2005, was$9,000,000. Out-of-pocket costs attributable to the business combination itself (as opposed to the SECregistration statement for the 100,000 shares of Pinch's common stock) paid by Pinch on May 31, 2005,totaled $100,000. In the consolidated balance sheet of Pinch Corporation and subsidiary on May 31,2005,the $1,600,000 [$8,500,000 + (100,000 x $20) + $100,000 - $9,000,000] difference between the parentcompany's cost and the carrying amounts of the subsidiary's identifiable net assets was allocated inaccordance with purchase accounting as follows: Inventories $ 250,000Plant assets 850,000Patents300,000Goodwill 200,000Total excess of cost over carrying amounts of subsidiary's net assets $1,600,000Under terms of the indenture for a $1,000,000 bond liability of Silver, Pinch was obligated to maintainSilver as a separate corporation and to issue a separate balance sheet for Silver each May 31. Pinch'scontroller contends that Silver's balance sheet on May 31, 2005, should value net assets at $10,600,000 -their cost to Pinch. Silver's controller disputes this valuation, claiming that generally accepted accountingprinciples require issuance of a historical cost balance sheet for Silver on May 31, 2005.Instructionsa. Present arguments supporting the Pinch controller's position.b. Present arguments supporting the Silver controller's position.c. Which position do you prefer? Explain. In January 2005, Pinch Corporation, a chain of discount stores, began a program of businesscombinations with its principal suppliers. On May 31, 2005, the close of its fiscal year, Pinch paid$8,500,000 cash and issued 100,000 shares of its common stock (current fair value $20 a share) for all10,000 outstanding shares of common stock of Silver Company. Silver was a furniture manufacturerwhose products were sold in Pinch's stores. Total n stockholders' equity of Silver on May 31, 2005, was$9,000,000. Out-of-pocket costs attributable to the business combination itself (as opposed to the SECregistration statement for the 100,000 shares of Pinch's common stock) paid by Pinch on May 31, 2005,totaled $100,000. In the consolidated balance sheet of Pinch Corporation and subsidiary on May 31,2005,the $1,600,000 [$8,500,000 + (100,000 x $20) + $100,000 - $9,000,000] difference between the parentcompany's cost and the carrying amounts of the subsidiary's identifiable net assets was allocated inaccordance with purchase accounting as follows: Inventories $ 250,000Plant assets 850,000Patents300,000Goodwill 200,000 Total excess of cost over carrying amounts of subsidiary's net assets $1,600,000Under terms of the indenture for a $1,000,000 bond liability of Silver, Pinch was obligated to maintainSilver as a separate corporation and to issue a separate balance sheet for Silver each May 31. Pinch'scontroller contends that Silver's balance sheet on May 31, 2005, should value net assets at $10,600,000 -their cost to Pinch. Silver's controller disputes this valuation, claiming that generally accepted accountingprinciples require issuance of a historical cost balance sheet for Silver on May 31, 2005.Instructionsa. Present arguments supporting the Pinch controller's position.b. Present arguments supporting the Silver controller's position.c. Which position do you prefer? Explain.

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a. Arguments supporting the Pinch controller's position:
1. The business combination between Pinch…

a. Present arguments supporting the Pinch controller's position. b. Present arguments supporting the Silver controller's position. c. Which position do you prefer? Explain.