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On May 1, Soriano Company reported the following account balances along with their estimated fair values: Items Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Carrying Amount $ 143,600 76,400 Fair Value $ 143,600 76,400 577,000 753,000 136,000 913,000 $ 1,550,000 $ 197,000 658,300 0 Retained earnings Total liabilities and equities $ 1,269,000 $ 197,000 676,000 100,000 296,000 $ 1,269,000 0 0 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 $141,000 to an investment banking firm. The following information was also available: • • Zambrano further agreed to pay an extra $85,000 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 $42,500. Soriano has a research and development project in process with an appraised value of $244,000. However, the project has not yet reached technological feasibility, and the project's assets have no alternative future use. Required: a. and b. Prepare Zambrano's journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $872,800 and (b) $982,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

On May 1, Soriano Company reported the following account balances along with their estimated fair values: Items Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Carrying Amount $ 143,600 76,400 Fair Value $ 143,600 76,400 577,000 753,000 136,000 913,000 $ 1,550,000 $ 197,000 658,300 0 Retained earnings Total liabilities and equities $ 1,269,000 $ 197,000 676,000 100,000 296,000 $ 1,269,000 0 0 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 $141,000 to an investment banking firm. The following information was also available: • • Zambrano further agreed to pay an extra $85,000 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 $42,500. Soriano has a research and development project in process with an appraised value of $244,000. However, the project has not yet reached technological feasibility, and the project's assets have no alternative future use. Required: a. and b. Prepare Zambrano's journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $872,800 and (b) $982,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter8: Liabilities And Stockholders' Equity
Section: Chapter Questions
Problem 8.1.2MBA
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On May 1, Soriano Company reported the following account balances along with their estimated fair values: Items Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Carrying Amount $ 143,600 76,400 Fair Value $ 143,600 76,400 577,000 753,000 136,000 913,000 $ 1,550,000 $ 197,000 658,300 0 Retained earnings Total liabilities and equities $ 1,269,000 $ 197,000 676,000 100,000 296,000 $ 1,269,000 0 0 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 $141,000 to an investment banking firm. The following information was also available: • • Zambrano further agreed to pay an extra $85,000 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 $42,500. Soriano has a research and development project in process with an appraised value of $244,000. However, the project has not yet reached technological feasibility, and the project's assets have no alternative future use. Required: a. and b. Prepare Zambrano's journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $872,800 and (b) $982,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Transcribed Image Text:On May 1, Soriano Company reported the following account balances along with their estimated fair values: Items Receivables Inventory Copyrights Patented technology Total assets Current liabilities Long-term liabilities Common stock Carrying Amount $ 143,600 76,400 Fair Value $ 143,600 76,400 577,000 753,000 136,000 913,000 $ 1,550,000 $ 197,000 658,300 0 Retained earnings Total liabilities and equities $ 1,269,000 $ 197,000 676,000 100,000 296,000 $ 1,269,000 0 0 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 $141,000 to an investment banking firm. The following information was also available: • • Zambrano further agreed to pay an extra $85,000 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 $42,500. Soriano has a research and development project in process with an appraised value of $244,000. However, the project has not yet reached technological feasibility, and the project's assets have no alternative future use. Required: a. and b. Prepare Zambrano's journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was (a) $872,800 and (b) $982,000. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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