The balance sheet of Seattle Company, along with market values of its assets and liabilities (as of
Fantastic news! We've Found the answer you've been seeking!
Question:
The balance sheet of Seattle Company, along with market values of its assets and liabilities (as of 1/1/2018), is as follows:
Seattle Company | ||
book value dr (cr) | market value dr (cr) | |
Current assets | $ 2,000,000 | $ 1,500,000 |
Plant & equipment (net) | 30,000,000 | 35,000,000 |
Patents | 100,000 | 2,000,000 |
Completed technology | 0 | 10,000,000 |
Brand name | 0 | 16,000,000 |
Licensing agreements | 0 | 4,000,000 |
Goodwill | 200,000 | 700,000 |
Liabilities | (28,000,000) | (30,000,000) |
Common stock, $10 par | (1,000,000) | |
Additional paid-in capital | (5,000,000) | |
Retained earnings | 1,700,000 |
- On 1/1/2018, assume Portland Company pays $10,000,000 in cash to acquire the assets and liabilities of Seattle Company. Prepare the JE made by Portland to record the business combination as a merger.
- Now assume on 1/1/2018, Portland Company pays $100,000,000 in cash for Seattle Company’s assets and liabilities. Prepare the JE made by Portland to record the business combination as a merger.
- Portland paid $100,000,000 in cash for Seattle. Three months later, Seattle’s patents are determined to have been worthless as of the date of acquisition. Prepare the entry to record this information.
- Portland paid $100,000,000 in cash for Seattle. Three months later, Seattle’s patents are determined to have been worthless due to an event occurring after the acquisition. Prepare the entry to record this information.
Related Book For
Intermediate Accounting
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
Posted Date: