Brass Corporation agrees to acquire the net assets of Warn Corporation on January 1, 2011. Warn has the following balance sheet on the date of acquisition:

An appraiser determines that in-process R&D exists and has an estimated value of $14,000. The appraisal indicates that the following assets have fair values that differ from their book values:
Fair Value
Inventory ............. $120,000
Equipment ........... 340,000
Trademark ........... 30,000
Required
Use value analysis to prepare the entry on the books of Brass Corporation to acquire the net assets of Warn Corporation under each of the following purchase price scenarios:
1. Purchase price is $550,000.
2. Purchase price is $350,000.

Transcribed Image Text:

Warn Corporation Balance Sheet January1, 2011 Assets Liabilities and E $145,000 100,000 200,000 50,000 75,000 $570,000 12,000 Bonds payable 55,000 Common stock Inventory Other current assets. Equipment (nel Trademark 294,000 Paid-in capital in excess of par 30,000 Retained earnings Total assets.. Tolal liabilities and equity