On January 1, 2024, Mel purchased 100% of Troy's outstanding shares in exchange for 100,000 shares of its $1 par common stock with a fair value of $17 per share. On this date, the book value of Troy's net assets was $1,200,000. The fair values of Troy's identifiable assets and liabilities were the same as their carrying amounts except for land which had a fair value of $300,000 more than its book value. The journal entry on Mel’s books to record the acquisition will include Question 2Select one: a debit to Goodwill for $500,000. a debt to Land for $300,000. a credit to Common Stock for $1,700,000. a debit to Investment in Sub for $1,700,000.
On January 1, 2024, Mel purchased 100% of Troy's outstanding shares in exchange for 100,000 shares of its $1 par common stock with a fair value of $17 per share. On this date, the book value of Troy's net assets was $1,200,000. The fair values of Troy's identifiable assets and liabilities were the same as their carrying amounts except for land which had a fair value of $300,000 more than its book value. The journal entry on Mel’s books to record the acquisition will include Question 2Select one: a debit to Goodwill for $500,000. a debt to Land for $300,000. a credit to Common Stock for $1,700,000. a debit to Investment in Sub for $1,700,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2024, Mel purchased 100% of Troy's outstanding shares in exchange for 100,000 shares of its $1 par common stock with a fair value of $17 per share. On this date, the book value of Troy's net assets was $1,200,000. The fair values of Troy's identifiable assets and liabilities were the same as their carrying amounts except for land which had a fair value of $300,000 more than its book value. The
Question 2Select one:
a debit to
a debt to Land for $300,000.
a credit to Common Stock for $1,700,000.
a debit to Investment in Sub for $1,700,000.
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