This exercise shows the similarity and the difference between two
This exercise shows the similarity and the difference between two ways to acquire plant assets.
Case A—Issue shares and buy the assets in separate transactions:
Atar, Inc. issued 10,000 common shares for cash of $700,000. In a separate transaction, Atar, Inc. purchased a building for $500,000 and equipment for $200,000. Journalize the two transactions.
Case B—Issue shares to acquire the assets:
Atar, Inc. issued 10,000 common shares to acquire a building valued at $500,000 and equipment worth $200,000. 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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