29 Jun Question 6. Poplar Corp. acquires the net assets of Sapling
Question
6. Poplar Corp. acquires the net assets of Sapling Company, which has the following balance sheet:
Accounts Receivable
$ 50,000
Inventory
80,000
Equipment, Net
50,000
Land & Building, Net
120,000
Total Assets
$300,000
========
Bonds Payable
$ 90,000
Common Stock
100,000
Retained Earnings
110,000
Total Liabilities and
$300,000
Stockholders’ Equity
========
Fair values on the date of acquisition:
Inventory
$100,000
Equipment
30,000
Land & Building
180,000
Customer List
30,000
Bonds Payable
100,000
Direct acquisition costs: $10,000
If Poplar paid $300,000 what journal entries would be recorded by both Poplar Corp. and Sapling Company?
7. Diamond acquired Heart’s net assets. At the time of the acquisition Heart’s Balance sheet was as follows:
Accounts Receivable
$130,000
Inventory
70,000
Equipment, Net
50,000
Building, Net
250,000
Land & Building, Net
100,000
Total Assets
$600,000
========
Bonds Payable
$100,000
Common Stock
50,000
Retained Earnings
450,000
Total Liabilities and
$600,000
Stockholders’ Equity
========
Fair values on the date of acquisition:
Inventory
$100,000
Equipment
30,000
Building
350,000
Land
120,000
Brand name copyright
50,000
Bonds payable
120,000
Direct acquisition costs: $5,000
Required:
Record the entry for the purchase of the net assets of Heart by Diamond at the following Cash prices:
a. $700,000
b. $300,000
c. $100,000
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