On January 1, 20X8, Alaska Corporation acquired Mercantile Corporation’s net ass

Question

On January 1, 20X8, Alaska Corporation acquired Mercantile Corporation’s net assets by laying $160,000 cash. Balance sheet data for the two companies and fair value information for Mercantile Corporation immediately before the business combination are given below.

Prepare the journal entry for Alaska to record the acquisition of Mercantile Corporation.

Mercaritle Alaska Book Value Book Value Fair Value Cash Accounts Receivable Irwerntory Patents Buildings and Equipment LessLAcomulated Depreciation $(140,Coo)$(150,000) Total Assets Accounts Payable Notes Payable Common Stock $S parvalue $2 parvalue Additional Paid-In Capital Retained Eamings Total Liabilities and Equities 200,000$ 30,000 $ 30,000 $ 40,000 $ 2,00o $ 2.00n $ 10,000 s ,000 $ 36.000 $ 50,CC0 $ 20,000$ 40,CCO $ 330,CC0 $ 250,00O$150,C00 $ 6CL,CC0 $ 197,000$278,CCO $ 85,CC0 $ 55,000$ 55,000 $ 100,00o s su,ooo $ s0,o0o 0,CEO $ 120,00O $ 20,CCO $ 140,000 $ 25,00o $ 155,000$ 17,000 $ 600.000 $ 197,000o

Explanation / Answer

Note : Net assets acquired should be booked at their fair value as on date of acquition

Working Note : Computation of Goodwill amount

Particulars Amount ($) Consideration Paid 160,000 Less : Net assets accquired [ $278,000 - $55,000 - $80,000 ] 143,000 Goodwill $17,000

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