On January 1, 2000, Bad Kitty, Inc bought Good Dog, LLC for $3,800,000. At the time of purchase Good Dog had the following assets and liabilities (all listed at fair value): land $1,200,000, cash $81,000, accounts receivable $380,000, investments $540,000, current liabilities $1,502,000, building $3,950,000, long term debt $2.2 million, and shareholder’s equity of $2,020,000. 3.1: Record the journal entry to record Bad Kitty’s purchase of Good Dog. 3.2: On December 31, 2000, the fair value of the Good Dog unit was $1,900,000. Further, Bad Kitty expected the following undiscounted net cash flow from the Good Dog unit over the next four years: $300,000, $300,000, $300,000, $1,400,000. Record any necessary journal entry.
On January 1, 2000, Bad Kitty, Inc bought Good Dog, LLC for $3,800,000. At the time of purchase Good Dog had the
following assets and liabilities (all listed at fair value): land $1,200,000, cash $81,000,
investments $540,000, current liabilities $1,502,000, building $3,950,000, long term debt $2.2 million, and shareholder’s
equity of $2,020,000.
3.1: Record the
3.2: On December 31, 2000, the fair value of the Good Dog unit was $1,900,000. Further, Bad Kitty expected the
following undiscounted net cash flow from the Good Dog unit over the next four years: $300,000, $300,000, $300,000,
$1,400,000. Record any necessary journal entry.
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