Question: This exercise shows the similarity and the difference between two ways to acquire plant assets. Case AIssue stock and buy the assets in separate transactions:

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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