Reference no: EM132636902
Question - On July 1, 2020, Ayayai Corporation purchased Young Company by paying $257,800 cash and issuing a $139,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows.
Cash $51,600 Accounts payable $207,000
Accounts receivable 89,700 Stockholders' equity 238,700
Inventory 106,000 $445,700
Land 40,600
Buildings (net) 75,600
Equipment (net) 71,000
Trademarks 11,200
$445,700
The recorded amounts all approximate current values except for land (fair value of $64,500), inventory (fair value of $125,100), and trademarks (fair value of $15,120).
Required -
(a) Prepare the July 1 entry for Ayayai Corporation to record the purchase.
(b) Prepare the December 31 entry for Ayayai Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,920.