The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value 644,750 $ $ 609,000 779,250 1,086,750 1,770,000 2,138,250 0 842,250 (102,000) (102,000) (2,000,000) (500,000) (424,500) (457,000) 289,500 Inventory Land Buildings Customer relationships Accounts payable Common stock Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Arturo pays cash of $4,456,250 to acquire Westmont. No stock is issued and Arturo pays $49,800 for legal fees to complete the transaction. Prepare Arturo's journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

The following book and fair values were available for Westmont Company as of March 1. Book Value Fair Value 644,750 $ $ 609,000 779,250 1,086,750 1,770,000 2,138,250 0 842,250 (102,000) (102,000) (2,000,000) (500,000) (424,500) (457,000) 289,500 Inventory Land Buildings Customer relationships Accounts payable Common stock Additional paid-in capital Retained earnings, 1/1 Revenues Expenses Arturo pays cash of $4,456,250 to acquire Westmont. No stock is issued and Arturo pays $49,800 for legal fees to complete the transaction. Prepare Arturo's journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

The following book and fair values were available for Westmont Company as of March 1.
Inventory
Land
Buildings
Customer relationships
Accounts payable
Common stock
Additional paid-in capital
Retained earnings, 1/1
Revenues
Expenses
Arturo pays cash of $4,456,250 to acquire Westmont. No stock is issued and Arturo pays $49,800 for legal fees to complete the
transaction.
View transaction list
Prepare Arturo's journal entries to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No
journal entry required" in the first account field.)
Journal entry worksheet
1
Book Value Fair Value
$ 644,750
$
609,000
779,250 1,086,750
1,770,000 2,138,250
842,250
0
(102,000) (102,000)
(2,000,000)
(500,000)
2
(424,500)
(457,000)
289,500
Note: Enter debits before credits.
Transaction
Record the acquisition of Westmont Company.
General Journal
Debit
Credit
>

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