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In: Accounting
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for...
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for cash. After the combination, Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts:
| Book Values | Fair Values | |||||
| Current assets | $ | 88,200 | $ | 88,200 | ||
| Equipment | 131,000 | 198,000 | ||||
| Trademark | 0 | 352,000 | ||||
| Liabilities | (74,200) | (74,200) | ||||
| Common stock | (100,000) | |||||
| Retained earnings | (45,000) | |||||
In addition, Acme paid an investment bank $30,900 cash for assistance in arranging the combination.
- Using the legacy purchase method for pre-2009 business combinations, prepare Acme’s entry to record its acquisition of Brem in its accounting records assuming the following cash amounts of $651,900 and $446,300 were paid to the former owners of Brem.
- How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method?
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Solution:
Part (a) & (b) solved in seprate sheet.
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ekkarill92 answered 1 year agoRelated Solutions
In a pre-2009 business combination, Acme Company acquired all of Brem Company’s assets and liabilities for...
In a pre-2009 business combination, Acme Company acquired all of
Brem Company’s assets and liabilities for cash. After the
combination Acme formally dissolved Brem. At the acquisition date,
the following book and fair values were available for the Brem
Company accounts:
Book Values
Fair Values
Current assets
$
74,500
$
74,500
Equipment
135,500
205,500
Trademark
0
397,000
Liabilities
(65,000
)
(65,000
)
Common stock
(100,000
)
Retained earnings
(45,000
)
Note: Parentheses indicate a credit balance.
In addition, Acme paid...
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Book
Values
Fair
Values
Current assets
$
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$
41,500
Building
108,000
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Land
17,000
35,200
Trademark
0
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?
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Values
Fair
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Current assets
$
61,000
$
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Building
91,750
44,650
Land
31,000
45,700
Trademark
0
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Goodwill
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