Prepare the december entry for indigo corporation

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Question - On July 1, 2017, Indigo Corporation purchased Young Company by paying $256,500 cash and issuing a $149,000 note payable to Steve Young. At July 1, 2017, the balance sheet of Young Company was as follows.

Cash

$51,500

Accounts payable

$207,000

Accounts receivable

91,500

Stockholders' equity

236,200

Inventory

103,000

 

$443,200

Land

40,300

 

 

Buildings (net)

75,300

 

 

Equipment (net)

70,300

 

 

Trademarks

11,300

 

 

 

$443,200

 

 

The recorded amounts all approximate current values except for land (fair value of $63,700), inventory (fair value of $125,500), and trademarks (fair value of $15,200).

Prepare the July 1 entry for Indigo Corporation to record the purchase.

Prepare the December 31 entry for Indigo Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,280.

Reference no: EM131693662

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