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cy, plant and equipment, net 33,600 Long-term liabilities 13,440 -Stockholders' equity 26,880 $57,120 Total liabilities & equity $57,120 sets and b. are independent of each other. de the journal entry if the investor pays cash and purchases the assets and a Credit > > Debit

cy, plant and equipment, net 33,600 Long-term liabilities 13,440 -Stockholders' equity 26,880 $57,120 Total liabilities & equity $57,120 sets and b. are independent of each other. de the journal entry if the investor pays cash and purchases the assets and a Credit > > Debit

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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Assume an investor purchases the business of an investee for $26,880. The fair values of the individual net assets are equal to their reported book values. The investee company reports the following balance sheet on the acquisition date: Current assets $23,520 Current liabilities Property, plant and equipment, net 33,600 Long-term liabilities $16,800 13,440 26,880 Stockholders' equity $57,120 Total liabilities & equity $57,120 Total assets Parts a. and b. are independent of each other. a. Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company. Debit Credit (to record the acquisition) b. Provide the journal entry if the investor pays cash and purchases all of the stock of the investee's shareholders. Debit Credit (to record the acquisition)
Transcribed Image Text:Assume an investor purchases the business of an investee for $26,880. The fair values of the individual net assets are equal to their reported book values. The investee company reports the following balance sheet on the acquisition date: Current assets $23,520 Current liabilities Property, plant and equipment, net 33,600 Long-term liabilities $16,800 13,440 26,880 Stockholders' equity $57,120 Total liabilities & equity $57,120 Total assets Parts a. and b. are independent of each other. a. Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company. Debit Credit (to record the acquisition) b. Provide the journal entry if the investor pays cash and purchases all of the stock of the investee's shareholders. Debit Credit (to record the acquisition)
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