Sunland Downhill Bikes manufactures high quality custom mountain bikes which are sold to some of the best professional riders in the world. As its business continues to grow, it has agreed to purchase a competitor's business, Kusam Rides. Included in the terms of sale is a requirement for Sunland to maintain the accounts and notes payable of Kusam Rides. The carrying amounts and fair value of these identifiable assets and identifiable liabilities are: Inventory Equipment Buildings Accounts Payable Notes Payable Carrying Amount $40,600 121,800 348,000 Jan. 1 Fair Value $29,000 Date Account Titles and Explanation 121,800 406,000 (11,600) (11,600) (40,600) (40,600) $458,200 $504,600 The total carrying amount of $458,200 represents the net identifiable assets on Kusam Rides' financial statements. The total fair value of $504,600 represents the fair value of the net identifiable assets. Using the fair value information above, Sunland agreed to purchase the business for $580,000 on January 1. Record the purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit Credit
Sunland Downhill Bikes manufactures high quality custom mountain bikes which are sold to some of the best professional riders in the world. As its business continues to grow, it has agreed to purchase a competitor's business, Kusam Rides. Included in the terms of sale is a requirement for Sunland to maintain the accounts and notes payable of Kusam Rides. The carrying amounts and fair value of these identifiable assets and identifiable liabilities are: Inventory Equipment Buildings Accounts Payable Notes Payable Carrying Amount $40,600 121,800 348,000 Jan. 1 Fair Value $29,000 Date Account Titles and Explanation 121,800 406,000 (11,600) (11,600) (40,600) (40,600) $458,200 $504,600 The total carrying amount of $458,200 represents the net identifiable assets on Kusam Rides' financial statements. The total fair value of $504,600 represents the fair value of the net identifiable assets. Using the fair value information above, Sunland agreed to purchase the business for $580,000 on January 1. Record the purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sunland Downhill Bikes manufactures high quality custom mountain bikes which are sold to some of the best professional riders in the
world. As its business continues to grow, it has agreed to purchase a competitor's business, Kusam Rides. Included in the terms of sale
is a requirement for Sunland to maintain the accounts and notes payable of Kusam Rides.
The carrying amounts and fair value of these identifiable assets and identifiable liabilities are:
Inventory
Equipment
Buildings
Accounts Payable
Notes Payable
Carrying Amount
$40,600
121,800
348,000
Jan. 1
Fair Value
$29,000
Date Account Titles and Explanation
121,800
406,000
(11,600)
(11,600)
(40,600) (40,600)
$458,200 $504,600
The total carrying amount of $458,200 represents the net identifiable assets on Kusam Rides' financial statements. The total fair value
of $504,600 represents the fair value of the net identifiable assets. Using the fair value information above, Sunland agreed to purchase
the business for $580,000 on January 1.
Record the purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit
entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Debit
Credit
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