Peter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows: Accounts receivable-net $90,000 220,000 30,000 20,000 40,000 $400,000 Current liabilities Long term debt Common stock ($1 par) Addtl. paid-in capital Retained earnings Total liab. & equity $75,000 90,000 10,000 205,000 20,000 $400,000 Inventory Land Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000. Required: Prepare Peter's general journal entry for the cash purchase of Salim's net assets.
Peter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows: Accounts receivable-net $90,000 220,000 30,000 20,000 40,000 $400,000 Current liabilities Long term debt Common stock ($1 par) Addtl. paid-in capital Retained earnings Total liab. & equity $75,000 90,000 10,000 205,000 20,000 $400,000 Inventory Land Building-net Equipment-net Total assets Fair values agree with book values except for inventory, land, and equipment, which have fair values of $260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000. Required: Prepare Peter's general journal entry for the cash purchase of Salim's net assets.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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Transcribed Image Text:Peter Corporation purchased the net assets of Salim, Inc. on January 2, 2020 for $380,000 cash and also paid
legal fees associated with acquisition of Salim of $15,000. Issuance expenses were $10,000. Salim, Inc. was
dissolved on the date of the acquisition. Salim's balance sheet on January 2, 2020 was as follows:
$90,000
220,000
30,000
20,000
40,000
$400,000
$75,000
90,000
10,000
205,000
20,000
$400,000
Accounts receivable-net
Current liabilities
Long term debt
Common stock ($1 par)
Addtl. paid-in capital
Retained earnings
Total liab. & equity
Inventory
Land
Building-net
Equipment-net
Total assets
Fair values agree with book values except for inventory, land, and equipment, which have fair values of
$260,000, $35,000 and $35,000, respectively. Salim has patent rights with a fair value of $20,000.
Required:
Prepare Peter's general journal entry for the cash purchase of Salim's net assets.
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