On May 1, Soriano Co. reported the following account balances along with their estimated fair values:ReceivablesInventoryCopyrightsPatented technologyTotal assetsCurrent liabilities.Long-term liabilities.Common stockRetained earningsTotal liabilities and equitiesCarryingAmount115, 10091, 400131,500899,000$1,237,000$$View transaction listFair Value$115, 10091,400581,500734,000$ 1,522,000191,000662,700191,000 $681,000100,000265,000$ 1,237,000On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. Tofacilitate the merger, Zambrano also paid $106,500 to an investment banking firm.The following information was also available:• Zambrano further agreed to pay an extra $70,400 to the former owners of Soriano only if they meet certain revenue goals duringthe next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at$35,200.Soriano has a research and development project in process with an appraised value of $217,500. However, the project has not yetreached 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) $829,800 & (b) $949,200. (If no entry is required for a transaction/event, select "No journal entry required" in the first accountfield.) Titiu.View transaction listJournal entry worksheetTel./1Note: Enter debits before credits.Record the acquisition of Soriano Co. Assume its initial cash payment to theformer owners was $829,800.Transaction1View transaction listRecord entryTel./Tel./Transaction2Record entryNote: Enter debits before credits.Journal entry worksheet< 1View transaction list2Transaction3ReceivablesInventoryCopyrightsPatented technologyRecord entryView transaction listResearch and development assetCurrent liabilitiesLong-term liabilitiesCashRecord the expenses related to the combination. Assume its initial cashpayment to the former owners was $829,800.Contingent performance liabilityGain on bargain purchase23Note: Enter debits before credits.Transaction42Record entryJournal entry worksheet4General Journal323Professional services expenseCashClear entryNote: Enter debits before credits.4General JournalRecord the acquisition of Soriano Co. Assume its initial cash payment to theformer owners was $949,200.Clear entry4ReceivablesInventoryCopyrightsPatented technologyResearch and development assetGoodwillCurrent liabilitiesLong-term liabilitiesCashContingent performance liabilityJournal entry worksheet< 1General Journal4Clear entryDebitGeneral JournalRecord the expenses related to the combination. Assume its initial cashpayment to the former owners was $949,200.Professional services expenseCashClear entryView general journalDebit829,800DebitCreditView general journalCreditDebit949,200829,800View general journalCreditCredit949,200View general journal>www.

The process of recording business transactions in the books of accounts for the first time is…

On May 1, Soriano Co. reported the following account balances along with their estimated fair values: Carrying Amount Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and equities Fair Value $ 115,100 $ 115,100 91,400 91,400 131,500 581,500 899,000 734,000 $1,237,000 $1,522,000 $ 191,000 $ 191,000 681,000 662,700 100,000 265,000 $ 1,237,000 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 $106,500 to an investment banking firm. The following information was also available: • Zambrano further agreed to pay an extra $70,400 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 $35,200. • Soriano has a research and development project in process with an appraised value of $217,500. 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) $829,800 & (b) $949,200. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q