he following book and fair values were available for Westmont Company as of March 1. Book value Fair value Inventory $ 630,000 $ 600,000 Land 750,000 990,000 Buildings 1,700,000 2,000,000 Customer relationships –0– 800,000 Accounts payable (80,000) (80,000) Common stock (2,000,000) Additional paid-in capital (500,000) Retained earnings, 1/1 (360,000) Revenues (420,000) Expenses 280,000 Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction. Required Prepare Arturo’s journal entries to record its acquisition of Westmont
The following book and fair values were available for Westmont Company as of March 1.
|
|
Book value |
Fair value |
|
Inventory |
$ 630,000 |
$ 600,000 |
|
Land |
750,000 |
990,000 |
|
Buildings |
1,700,000 |
2,000,000 |
|
Customer relationships |
–0– |
800,000 |
|
Accounts payable |
(80,000) |
(80,000) |
|
Common stock |
(2,000,000) |
|
|
Additional paid-in capital |
(500,000) |
|
|
|
(360,000) |
|
|
Revenues |
(420,000) |
|
|
Expenses |
280,000 |
Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to complete the transaction.
Required
Prepare Arturo’s
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