Solution-Record the acquisition of the assets

Record the acquisition of the assets

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Reference no: EM132056441

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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Record the acquisition of the assets

Reference no: EM132056441

Reference no: EM132056441

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