Concord Company acquired the assets (except for cash) and assumed the liabilities of Cullumber Company on...

   

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Concord Company acquired the assets (except for cash) and assumed the liabilities of Cullumber Company on January 1, 2024, paying $745,000 cash. Cullumber Company's December 31, 2023, balance sheet, reflecting both book values and fair values, showed: Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Total Accounts payable Note payable Common stock, $2 par value Other contributed capital Retained earnings Total Book Value $97,000 111.000 $108,000 205,000 113,900 394,000 262,000 $977,900 $1,170,100 178,000 254,000 232,900 Fair Value $977,900 $90,700 122.900 169,900 474,900 311,700 $108,000 205,000 As part of the negotiations, Concord Company agreed to pay the former stockholders of Cullumber Company $184,800 cash if the post-combination earnings of the combined company (Concord) reached certain levels during 2024 and 2025. The fair value of contingent consideration was estimated to be $146,000 on the date of acquisition. Record the journal entry on the books of Pham Company to record the acquisition on January 1, 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Jan. 1, 2024 Account Titles and Explanation Accounts Receivable Inventory Land Buildings Equipment Goodwill Cash Accounts Payable Note Payable Debit Credit During 2024, the likelihood of meeting the post combination earnings goal increased. As a result, at the end of 2024, the estimated fair value of the contingent consideration increased to $167,100. Prepare any journal entry needed to account for the change in the fair value of contingent consideration. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date Jan. 2, 2024 Account Titles and Explanation Goodwill Cont Debit Credit During 2025, the likelihood of meeting the post combination earnings goal significantly decreased and the contingent consideration target was not met. Prepare any journal entry needed to account for the change in the fair value of contingent consideration. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date Account Titles and Explanation Jan. 2, 2025 Debit Credit Concord Company acquired the assets (except for cash) and assumed the liabilities of Cullumber Company on January 1, 2024, paying $745,000 cash. Cullumber Company's December 31, 2023, balance sheet, reflecting both book values and fair values, showed: Accounts receivable (net) Inventory Land Buildings (net) Equipment (net) Total Accounts payable Note payable Common stock, $2 par value Other contributed capital Retained earnings Total Book Value $97,000 111.000 $108,000 205,000 113,900 394,000 262,000 $977,900 $1,170,100 178,000 254,000 232,900 Fair Value $977,900 $90,700 122.900 169,900 474,900 311,700 $108,000 205,000 As part of the negotiations, Concord Company agreed to pay the former stockholders of Cullumber Company $184,800 cash if the post-combination earnings of the combined company (Concord) reached certain levels during 2024 and 2025. The fair value of contingent consideration was estimated to be $146,000 on the date of acquisition. Record the journal entry on the books of Pham Company to record the acquisition on January 1, 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Jan. 1, 2024 Account Titles and Explanation Accounts Receivable Inventory Land Buildings Equipment Goodwill Cash Accounts Payable Note Payable Debit Credit During 2024, the likelihood of meeting the post combination earnings goal increased. As a result, at the end of 2024, the estimated fair value of the contingent consideration increased to $167,100. Prepare any journal entry needed to account for the change in the fair value of contingent consideration. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date Jan. 2, 2024 Account Titles and Explanation Goodwill Cont Debit Credit During 2025, the likelihood of meeting the post combination earnings goal significantly decreased and the contingent consideration target was not met. Prepare any journal entry needed to account for the change in the fair value of contingent consideration. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date Account Titles and Explanation Jan. 2, 2025 Debit Credit

Answer rating: 100% (QA)

Here are the journal entries to record the acquisition on January 1 2024 and the changes in the fair value of contingent consideration at the end of 2024 and 2025 1 Journal entry to record the acquisi... View the full answer