Question: This exercise shows the similarity and the difference between two ways to acquire plant assets. Case AIssue shares 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 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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