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Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments Land Liabilities Cashi Buildings and equipment Patents ÷ Description + Acquisition expenses (b) Plastic acquires Steel as a merger for $85,000 cash. Other direct cash acquisition costs are $5,000. General Journal # + Book Fair Value Value $10,000 $10,000 35,000 45,000 26,000 31,000 7,000 14,000 5,000 10,000 # $83,000 # $22,000 $22,000 25,000 36,000 $83,00 Debit (c) Plastic acquires all of Steel's stock for $275,000 cash, in a stock acquisition. Other direct cash acquisition costs are $15,000. General Journal Debit Credit Debit Credit Credit

Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments Land Liabilities Cashi Buildings and equipment Patents ÷ Description + Acquisition expenses (b) Plastic acquires Steel as a merger for $85,000 cash. Other direct cash acquisition costs are $5,000. General Journal # + Book Fair Value Value $10,000 $10,000 35,000 45,000 26,000 31,000 7,000 14,000 5,000 10,000 # $83,000 # $22,000 $22,000 25,000 36,000 $83,00 Debit (c) Plastic acquires all of Steel's stock for $275,000 cash, in a stock acquisition. Other direct cash acquisition costs are $15,000. General Journal Debit Credit Debit Credit Credit

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments. Land Liabilities Cash Buildings and equipment Patents ÷ Description (b) Plastic acquires Steel as a merger for $85,000 cash. Other direct cash acquisition costs are $5,000. General Journal Acquisition expenses + Book Fair Value Value $10,000 $10,000 35,000 45,000 26,000 31,000 7,000 14,000 5,000 10,000 + $83,000 + $22,000 $22,000 25,000 36,000 $83,000 Debit (c) Plastic acquires all of Steel's stock for $275,000 cash, in a stock acquisition. Other direct cash acquisition costs are $15,000. General Journal Debit Credit Debit Credit Credit
Transcribed Image Text:Acquisition Entries, Acquisition Costs, Bargain Gain Plastic Corporation is contemplating a business combination with Steel Corporation at December 31, 2021. Steel's condensed balance sheet on that date appears below: Assets Cash and receivables Inventory Equity method investments Land Buildings and equipment Patents Total assets Liabilities and Stockholders' Equity Liabilities Common stock Retained earnings Total liabilities and equity Cash and receivables Inventory Equity method investments Land Description Buildings and equipment Patents Goodwill Liabilities Required Prepare the journal entry to record the business combination of Plastic and Steel for each of the following acquisition costs and combination methods. (a) Plastic acquires Steel as a merger for $250,000 cash. Other direct cash acquisition costs are $20,000. General Journal Description Cash and receivables Inventory Equity method investments. Land Liabilities Cash Buildings and equipment Patents ÷ Description (b) Plastic acquires Steel as a merger for $85,000 cash. Other direct cash acquisition costs are $5,000. General Journal Acquisition expenses + Book Fair Value Value $10,000 $10,000 35,000 45,000 26,000 31,000 7,000 14,000 5,000 10,000 + $83,000 + $22,000 $22,000 25,000 36,000 $83,000 Debit (c) Plastic acquires all of Steel's stock for $275,000 cash, in a stock acquisition. Other direct cash acquisition costs are $15,000. General Journal Debit Credit Debit Credit Credit
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