On March 1, 2020, Dorsey Corporation purchased Johnson Company. The book and fair value of Johnson's balance sheet accounts is shown below. Record the purchase on Dorsey's books under each of the following independent assumptions. a. Dorsey paid Johnson $1,000,000 b. Dorsey paid Johnson $700,000 Book Value Fair Value Cash 50,000 50,000 Accounts Receivable 90,000 75,000 Inventory Equipment Buildings 125,000 175,000 70,000 100,000 75,000 95,000 Land 600,000 700,000 Accounts Payable Note Payable Retained Earnings 200,000 200,000 100,000 100,000 315,000 315,000 Common Stock 15,000 250,000 Paid in Capital 380,000 380,000
On March 1, 2020, Dorsey Corporation purchased Johnson Company. The book and fair value of Johnson's balance sheet accounts is shown below. Record the purchase on Dorsey's books under each of the following independent assumptions. a. Dorsey paid Johnson $1,000,000 b. Dorsey paid Johnson $700,000 Book Value Fair Value Cash 50,000 50,000 Accounts Receivable 90,000 75,000 Inventory Equipment Buildings 125,000 175,000 70,000 100,000 75,000 95,000 Land 600,000 700,000 Accounts Payable Note Payable Retained Earnings 200,000 200,000 100,000 100,000 315,000 315,000 Common Stock 15,000 250,000 Paid in Capital 380,000 380,000
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions
Section: Chapter Questions
Problem 38P
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Transcribed Image Text:On March 1, 2020, Dorsey Corporation purchased Johnson Company.
The book and fair value of Johnson's balance sheet accounts is shown
below. Record the purchase on Dorsey's books under each of the
following independent assumptions.
a. Dorsey paid Johnson $1,000,000
b. Dorsey paid Johnson $700,000
Book Value Fair Value
Cash
50,000
50,000
Accounts Receivable
90,000
75,000
Inventory
125,000
175,000
Equipment
70,000
100,000
Buildings
75,000
95,000
Land
600,000
700,000
Accounts Payable
200,000
200,000
Note Payable
Retained Earnings
100,000
100,000
315,000
315,000
Common Stock
15,000
250,000
Paid in Capital
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380,000
380,000
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