5points

eBook

Print

References

Check my workCheck My Work button is now enabled

Item 7

On December 31, 20X6, Print Corporation and Size Company entered into a business combination in which Print acquired all of Sizes common stock for $968,000. At the date of combination, Size had common stock outstanding with a par value of $110,000, additional paid in capital of $411,000, and retained earnings of $180,000. The fair values and book values of all Sizes assets and liabilities were equal at the date of combination, except for the following:

	Book Value				Fair Value
Inventory		$	57,000			$	62,000
Land			76,000				170,000
Buildings			411,000				509,000
Equipment			509,000				579,000

The buildings had a remaining life of 18 years, and the equipment was expected to last another 8 years. In accounting for the business combination, Print decided to use push-down accounting on Sizes books. During 20X7, Size earned net income of $99,000 and paid a dividend of $61,000. All of the inventory on hand at the end of 20X6 was sold during 20X7. During 20X8, Size earned net income of $101,000 and paid a dividend of $61,000. Required: a. Record the acquisition of Size's stock on Print's books on December 31, 20X6. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)