Bower Company purchased Lark Corporation€™s net assets on January 3, 20X2, for $625,000 cash. In addition, Bower incurred $5,000 of direct costs in consummating the combination. At the time of acquisition, Lark reported the following historical cost and current market data:

Required
Give the journal entry or entries with which Bower recorded its acquisition of Lark€™s netassets.

Transcribed Image Text:

Balance Sheet Item Book Value Fair Value Cash & Receivables Inventory Buildings & Equipment (net) Patent Total Assets $ 50,000 100,000 200,000 50,000 150,000 300,000 200,000 $700,000 $350,000 $ 30,000 100,000 80,000 140,000 $350,000 30,000 Accounts Payable Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities