Reference no: EM132781330

Company Y acquired Company Z on January 1, 2019. Company Z had the following items on its books:

Cash $80,000;

Accounts receivable $150,000;

Prepaid expense $75,000;

Building $800,000;

Land $350,000;

Liabilities $650,000;

Common Stock $500,000;

Retained earnings $305,000.

The fair value of the asset items are:

Cash $80,000;

Accounts receivable $150,000;

Prepaid expense $75,000;

Building $1,400,000;

Land $550,000.

Problem 1: Record the journal entry of this acquisition if Company Y offered Company Z 1) $1.8 million and 2) $1.4 million.