Tyco decided to sell one of its subsidiaries, Right Controls. Johnson Brothers, is the purchaser of E subsidiary. Johnson Brothers paid $2,000,000 for Right Controls. Johnson Brothers performed a va analysis of Right Controls assets acquired and liabilities. The following table presents book values Right Controls financial statements and fair values determined by Johnson Brothers: Description Inventory Accounts Receivable Prepaid Assets Equipment Right-of-Use Building Patent Trademark Current Liabilities Lease Obligation Other Long-term Liabilities Book Value 420,000 330,000 70,000 290,000 330,000 125,000 170,000 135,000 Fair Value $450,000 330,000 60,000 410,000 360,000 220,000 150,000 125,000 170,000 135,000 NEGOTT sinc urlt to taco srlt ann a. Prepare the journal entry made by Johnson Brothers to record the acquisition of Right Controls. b. Describe how the journal entry would be different if the acquisition price was $1 million.

Tyco decided to sell one of its subsidiaries, Right Controls. Johnson Brothers, is the purchaser of E subsidiary. Johnson Brothers paid $2,000,000 for Right Controls. Johnson Brothers performed a va analysis of Right Controls assets acquired and liabilities. The following table presents book values Right Controls financial statements and fair values determined by Johnson Brothers: Description Inventory Accounts Receivable Prepaid Assets Equipment Right-of-Use Building Patent Trademark Current Liabilities Lease Obligation Other Long-term Liabilities Book Value 420,000 330,000 70,000 290,000 330,000 125,000 170,000 135,000 Fair Value $450,000 330,000 60,000 410,000 360,000 220,000 150,000 125,000 170,000 135,000 NEGOTT sinc urlt to taco srlt ann a. Prepare the journal entry made by Johnson Brothers to record the acquisition of Right Controls. b. Describe how the journal entry would be different if the acquisition price was $1 million.

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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