Record the acquisition of the assets

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Question - P Company Acquired the assets and assumed the liabilities of S Company on January 1, 2014, for $510,000 when S Company's balance sheet was as follows:

Cash

$96,000

Account Payable

$44,400

Receivables

55,200

Bonds Payable, 10%


Inventory

110,400

Due 12/31/2019

480,000

Land

169,200

Common Stock, $2 par v.

120.000

Plant and Equipments (net)

466,800

Retained Earnings

253,200

Total

$897,600

Total

$897,600

Fair value of S Company's assets and liabilities were equal to their book values except for the following:

Inventory has a fair value of $126,000

Land has a fair value of $198,000

The bonds pay interest semiannually on June 30 and December 31. The current yield rate on bonds of similar risk is 8%

Required: Prepare journal entry on P Company's books to record the acquisition of the assets and assumption of the liabilities of S Company.

Reference no: EM132056441

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