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1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $741,400. 2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $741,400. 3. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $861,500. 4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $861,500.

1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $741,400. 2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $741,400. 3. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $861,500. 4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $861,500.

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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1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $741,400.

2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $741,400.

3. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $861,500.

4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $861,500.

 

On May 1, Soriano Co. reported the following account balances along with their estimated fair values: Carrying Fair Value 2$ Amount Receivables $ Inventory Copyrights Patented technology 152,400 85,600 174,000 836,000 $ 1,248,000 $1,414,000 152,400 85,600 558,000 618,000 Total assets Current liabilities $ 188,000 664,000 100,000 296,000 $ 1,248,000 $ 649,700 188,000 Long-term liabilities Common stock Retained earnings Total liabilities and equities On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $113,000 to an investment banking firm. The following information was also available: • Zambrano further agreed to pay an extra $86,200 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $43,100. • Soriano has a research and development project in process with an appraised value of $227,500. However, the project has not yet reached technological feasibility and the project's assets have no alternative future use. a&b. Prepare Zambrano's journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $741,400 & (b) $861,500. (If no entry is required for a transaction/event, select entry reguired" in the first account field.)
Transcribed Image Text:On May 1, Soriano Co. reported the following account balances along with their estimated fair values: Carrying Fair Value 2$ Amount Receivables $ Inventory Copyrights Patented technology 152,400 85,600 174,000 836,000 $ 1,248,000 $1,414,000 152,400 85,600 558,000 618,000 Total assets Current liabilities $ 188,000 664,000 100,000 296,000 $ 1,248,000 $ 649,700 188,000 Long-term liabilities Common stock Retained earnings Total liabilities and equities On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $113,000 to an investment banking firm. The following information was also available: • Zambrano further agreed to pay an extra $86,200 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $43,100. • Soriano has a research and development project in process with an appraised value of $227,500. However, the project has not yet reached technological feasibility and the project's assets have no alternative future use. a&b. Prepare Zambrano's journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $741,400 & (b) $861,500. (If no entry is required for a transaction/event, select entry reguired" in the first account field.)
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