Acquisition of Net Assets is a process in which acquiring company acquires all the assets and liabilities of the acquired company in exchange of consideration. In this process, acquiring company records all identifiable assets and liabilities at fair values and any excess of the consideration paid over a fair value is recognized as goodwill . To prepare: Journal entries to record acquisition of net assets in company M.

Question

Want to see the full answer?

Answer 1

Question

Chapter 1, Problem 1.29P

To determine

Introduction: Acquisition of Net Assets is a process in which acquiring company acquires all the assets and liabilities of the acquired company in exchange of consideration. In this process, acquiring company records all identifiable assets and liabilities at fair values and any excess of the consideration paid over a fair value is recognized as goodwill.

To prepare: Journal entries to record acquisition of net assets in company M.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Price Company issued 8,740 shares of its $20 par value common stock for the net assets of Sims Company in a business combination under which Sims Company will be merged into Price Company. On the date of the combination, Price Company common stock had a fair value of $30 per share. Balance sheets for Price Company and Sims Company immediately prior to the combination were: Price Sims Current assets $460,540 $61,810 Plant and equipment (net) 529,190 140,940 Total $989,730 $202,750 Liabilities $274,100 $53,300 Common stock, $20 par value 558,200 88,000 Other contributed capital 72,870 20,750 Retained earnings 84,560 40,700 Total $989,730 $202,750 (a) If the business combination is treated as a purchase and Sims Company’s net assets have a fair value of $209,574, Price Company’s balance sheet immediately after the combination will include goodwill of…

Man merged with San Corporation in a business combination in which San issued 30,000 shares of its $5 par (current fair value $20 a share) common stock to stockholders of Man in exchange for all their outstanding common stock. The journal entry for the merger includes: a. Debit to investment in common stock of Man company $ 600,000. b. Debit to investment in common stock of Man company $ 450,000. c. Debit to investment in common stock of Man company $ 150,000. d. Debit to investment in common stock of Man company $ 300,000.

On January 2, 20X8, Primary Corporation acquired 100 percent of Secondary Company's outstanding common stock. In exchange for Secondary's stock, Primary issued bonds payable with a par and fair value of $650,000 directly to the selling stockholders of Secondary. The two companies continued to operate as separate entities subsequent to combination. Immediately prior to the combination, the book values and fair values of the companies' assets and liabilities were as follows: Secondary Company Primary Corporation Book Value Fair Value $ 12,000 $ 12,000 41,000 39,000 (2,000) 86,000 89,000 55,000 200,000 960,000 650,000 (411,000) ETT $ 741,000 $ 990,000 $ 38,000 $ 38,000 200,000 210,000 300,000 100,000 103,000 $ 741,000 Cash Receivables Allowance for Bad Debts Inventory Land Buildings and Equipment Accumulated Depreciation Patent Total Assets Current Payables Bonds Payable Common Stock Additional Paid-In Capital Retained Earnings Book Value $ 9,000 31,000 (1,000) 68,000 50,000 670,000…