Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and equities Receivables Inventory $ 83,900 $ (12,900) (54,250) Buildings (net) Equipment (net) Total assets 70,250 78,900 24,100 (90,000) $257,150 $ (257,150)
On June 30, 2018, Streeter Company reported the following account balances:
On June 30, 2018, Princeton Company paid $310,800 cash for all assets and liabilities of Streeter, which will cease to exist as a separate entity. In connection with the acquisition, Princeton paid $15,100 in legal fees. Princeton also agreed to pay $55,600 to the former owners of Streeter contingent on meeting certain revenue goals during 2019. Princeton estimated the present value of its probability adjusted expected payment for the contingency at $17,900.
In determining its offer, Princeton noted the following pertaining to Streeter:
• It holds a building with a fair value $43,100 more than its book value.
• It has developed a customer list appraised at $25,200, although it is not recorded in its financial records.
• It has research and development activity in process with an appraised fair value of $36,400. However, the project has not yet reached technological feasibility and the assets used in the activity have no alternative future use.
• Book values for the receivables, inventory, equipment, and liabilities approximate fair values.
Prepare Princeton’s accounting entries to record the combination with Streeter.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
