1) Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1) Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31, 2011. Parrot borrowed $2.000,000 to complete this transaction, in addition to the $640,000 cash that they paid directly. The fair value and book value of Sparrowis recorded assets and liabilities as of the date of acquisition are listed below. In addition, Sparrow had a patent that had a fair value of $50,000. Book Value Fair Value Cash $120,000 $120,000 Inventories 220,000 250,000 Other current assets 630,000 600,000 Land 270,000 320,000 Plant assets-net 4,650,000 4,600,000 Total Assets $5,890,000 Accounts payable $1.200,000 $1,200,000 Notes payable 2,100,000 2,100,000 Capital stock, $5 par 700,000 Additional paid-in capital 1,400,000 Retained Earnings 490,000 Total Liabilities & Equities $5,890,000 Required: 1. Prepare Parrotis general journal entry for the acquisition of Sparrow, assuming that Sparrow survives as a separate legal entity. 2. Prepare Parrot's general journal entry for the acquisition of Sparrow, assuming that Sparrow will dissolve as a separate legal entity. Answer: 1. General journal entry recorded by Parrot for the acquisition of Sparrow (Sparrow survives as a separate legal entity): Investment in Sparrow 2,640,000 Cash 640,000 Notes Payable 2,000,000 1) Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31, 2011. Parrot borrowed $2.000,000 to complete this transaction, in addition to the $640,000 cash that they paid directly. The fair value and book value of Sparrowis recorded assets and liabilities as of the date of acquisition are listed below. In addition, Sparrow had a patent that had a fair value of $50,000. Book Value Fair Value Cash $120,000 $120,000 Inventories 220,000 250,000 Other current assets 630,000 600,000 Land 270,000 320,000 Plant assets-net 4,650,000 4,600,000 Total Assets $5,890,000 Accounts payable $1.200,000 $1,200,000 Notes payable 2,100,000 2,100,000 Capital stock, $5 par 700,000 Additional paid-in capital 1,400,000 Retained Earnings 490,000 Total Liabilities & Equities $5,890,000 Required: 1. Prepare Parrotis general journal entry for the acquisition of Sparrow, assuming that Sparrow survives as a separate legal entity. 2. Prepare Parrot's general journal entry for the acquisition of Sparrow, assuming that Sparrow will dissolve as a separate legal entity. Answer: 1. General journal entry recorded by Parrot for the acquisition of Sparrow (Sparrow survives as a separate legal entity): Investment in Sparrow 2,640,000 Cash 640,000 Notes Payable 2,000,000
Expert Answer:
Answer rating: 100% (QA)
1 Date account titles debit credit Dec 312013 Investment in sparrow 2... View the full answer
Related Book For
Accounting
ISBN: 978-0324401844
22nd Edition
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
Posted Date:
Students also viewed these accounting questions
-
For each situation prepare the appropriate journal entry for the redemption of the bonds. (a) Thunder Corporation retired $130,000 face value, 12% bonds on June 30, 2007, at 102. The carrying value...
-
On July 31, 2013 Sun-Glass Hut paid KAT Watches Inc $3,170,062.50 for 21,750 custom watches. As part of the order KAT Watches has promised to in-print Sun-Glass Hut's insignia on each watch band. KAT...
-
Some silent mutations have been found to be associated with disease. Suggest a possible mechanism for this. How would you test this hypothesis?
-
In Problem, find the indicated derivative. Find y (5) if d 2 y/dx 2 = 3 3x + 2.
-
Write the molecular orbital configuration of the diatomic molecule BN. What is the bond order of BN? Is the substance diamagnetic or paramagnetic? Use the order of energies that was given for...
-
What is the effect of increasing each of the following on an attribute estimation sample size? a. The allowable risk of assessing control risk too low b. The tolerable failure rate c. The expected...
-
Ormet Primary Aluminum Corporation, operated an aluminum smelter plant in Hannibal, Ohio. The facility ceased production in October 2013 in order to liquidate its assets after filing for bankruptcy...
-
The Prince-Robbins partnership has the following capital account balances on January 1, 2015: Prince, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $70,000 Robbins, Capital . . ....
-
the tuition fee for maths tuition for john is expected to be 6500 per year if he attend tuition for 4 year starting from 4 years from now how much does he have to have in her account which yields 6...
-
Today is May 17, 2023, and you, CPA, are a Senior Tax Associate at Borden & Laurier LLP. Sylvie Condurache, Tax Manager, has called you into her office to discuss a long-time client: "I just got out...
-
1. The following table contains several definitions of terms that are used in Computer Science. Letter Definition A Cleaning up data entered by removing non-standard characters B Hiding or removing...
-
What is the assumed behaviour of a risk-averse investor?. What view might a risk-averse investor take of the interaction of these two types of risk?
-
(a) Explain the limitations of historical cost accounting. (150 words) (b) Compare entry price and exit price as measures of value that could be used as alternatives to historical cost accounting....
-
Define the following: economic interest in oil and gas mineral rights mineral interest royalty interest working interest overriding royalty interest production payment interest
-
List the steps in finding oil and gas.
-
Write a short essay (500 words) listing the advantages and disadvantages of having the same accounting rules in all countries.
-
A box weighing 408 N is hung from two cables. The angle between horizontal and each cable is 32.5. What is the tension in each cable? N
-
For the following exercises, find the inverse of the function and graph both the function and its inverse. f(x) = 4 x 2 , x 0
-
EarthLink, Inc., is a nationwide Internet Service Provider (ISP). Earthlink provides a variety of services to its customers, including narrowband access, broadband or high-speed access, and Web...
-
The following is a list of costs incurred by several businesses: a. Packing supplies for products sold. b. Tires for an automobile manufacturer. c. Costs for television advertisement. d. Disk drives...
-
Carolina Furniture Company manufactures unfinished oak furniture. Carolina uses a standard cost system. The direct labor, direct materials, and factory overhead standards for an unfinished dining...
-
Explain the difference between selling, general and administrative, and financial expenses.
-
What are the main types of accounts included in the Income statement to determine profit or loss? Define each.
-
State whether you think a business would recognise the following as revenue. When would it be recognised? a Cash sale by business $20 000 b Sale of excess equipment by a restaurant $350 c...
Study smarter with the SolutionInn App