Question

This exercise shows the similarity and the difference between two ways to acquire
plant assets.
Case A—Issue stock and buy the assets in separate transactions:
Arthur, Inc., issued 14,000 shares of its $10 par common stock for cash of $600,000. In a separate transaction, Arthur, Inc., purchased a building for $525,000 and equipment for $75,000. Journalize the two transactions.
Case B—Issue stock to acquire the assets:
Arthur, Inc., issued 14,000 shares of its $10 par common stock to acquire a building with a fair market value of $525,000 and equipment with a fair market value of $75,000. Journalize this single transaction.
Compare the balances in all accounts after making both sets of entries. Are the
account balances similar or different?



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  • CreatedApril 29, 2014
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