18. Power Company purchased Sark Corporation’s net assets on January 3, 20X2, for $635,000 cash. In addition, Power incurred $8,000 of direct costs in consummating the combination. At the time of acquisition, Sark reported the following historical cost and current market data: Balance Sheet Item Book Value Fair Value Assets Cash and Receivables $ 67,000 $ 67,000 Inventory 108,000 154,000 Buildings and Equipment (net) 210,000 305,000 Patent 0 202,000 Total Assets $ 385,000 $ 728,000 Liabilities and Equities Accounts Payable $ 22,000 $ 22,000 Common Stock 92,000 Additional Paid-In Capital 70,000 Retained Earnings 201,000 Total Liabilities and Equities $ 385,000 Required: Prepare the journal entry or entries with which Power recorded its acquisition of Sark’s net assets. A. Record the payment of acquisition costs. B. Record the acquisition of Sark Corporation's net assets.
18. Power Company purchased Sark Corporation’s net assets on January 3, 20X2, for $635,000 cash. In addition, Power incurred $8,000 of direct costs in consummating the combination. At the time of acquisition, Sark reported the following historical cost and current market data: Balance Sheet Item Book Value Fair Value Assets Cash and Receivables $ 67,000 $ 67,000 Inventory 108,000 154,000 Buildings and Equipment (net) 210,000 305,000 Patent 0 202,000 Total Assets $ 385,000 $ 728,000 Liabilities and Equities Accounts Payable $ 22,000 $ 22,000 Common Stock 92,000 Additional Paid-In Capital 70,000 Retained Earnings 201,000 Total Liabilities and Equities $ 385,000 Required: Prepare the journal entry or entries with which Power recorded its acquisition of Sark’s net assets. A. Record the payment of acquisition costs. B. Record the acquisition of Sark Corporation's net assets.
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 37E: During 20X1, Craig Company had the following transactions: a. Purchased 300,000 of 10-year bonds...
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18.
Power Company purchased Sark Corporation’s net assets on January 3, 20X2, for $635,000 cash. In addition, Power incurred $8,000 of direct costs in consummating the combination. At the time of acquisition, Sark reported the following historical cost and current market data:
| Book Value | Fair Value | |
|---|---|---|
| Assets | ||
| Cash and Receivables | $ 67,000 | $ 67,000 |
| Inventory | 108,000 | 154,000 |
| Buildings and Equipment (net) | 210,000 | 305,000 |
| Patent | 0 | 202,000 |
| Total Assets | $ 385,000 | $ 728,000 |
| Liabilities and Equities | ||
| Accounts Payable | $ 22,000 | $ 22,000 |
| Common Stock | 92,000 | |
| Additional Paid-In Capital | 70,000 | |
| 201,000 | ||
| Total Liabilities and Equities | $ 385,000 |
Required:
Prepare the
A. Record the payment of acquisition costs.
B. Record the acquisition of Sark Corporation's net assets.
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