Recording a Business Combination

Petra Corporation paid $$8$ million in cash to acquire the assets and liabilities of Salisbury Company. Petra also agreed to make an additional cash payment in the future, with an expected present value of $$500,000,$ if certain performance targets are met. Petra paid legal and consulting fees of $$150,000$ in cash in connection with the merger. A comparison of book and fair values of Salisbury$$s assets and liabilities follows:

$($in thousands$)$ Book Value Fair Value

Current assets $ $400$ $ $350$

Property and equipment, net $4,6001,000$

Patents and trademarks $8001,200$

Current liabilities $(600)(600)$

Long$-$term debt $(2,900)(3,000)$

Net assets $ $2,300$ $ $(1,050)$

Salisbury also has previously unreported developed technology, valued at $$1\mathrm{.}5$ million, that meets ASC Topic $805$ criteria for capitalization.

Required

Prepare the journal entry or entries made by Petra to record the business combination as a merger.

Enter answers using all zeros $-$ do not abbreviate into thousands as shown above table. $($current assets, PPE, Patents and tradmarks, Identifiable intangible: delevoped technology, merger expenses, goodwill, earnout liability, long term debt, cash.$)$

Answer rating: 100% (QA)

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