Answered: The following book and fair values were…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter14: Statement Of Cash Flows

Section: Chapter Questions

Problem 24BEA: During 20X2, Norton Company had the following transactions: a. Cash dividends of 20,000 were paid....

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The following book and fair values were available for Westmont Company as of March 1.

	Book Value	Fair Value
Inventory	$	644,750		$	609,000
Land		779,250			1,086,750
Buildings		1,770,000			2,138,250
Customer relationships		0			842,250
Accounts payable		(102,000	)		(102,000	)
Common stock		(2,000,000	)
Additional paid-in capital		(500,000	)
Retained earnings, 1/1		(424,500	)
Revenues		(457,000	)
Expenses		289,500

Arturo Company pays $4,130,000 cash and issues 28,200 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $32,400 and Arturo pays $49,800 for legal fees to complete the transaction.

Prepare Arturo’s journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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