1. On January 1, 16 Brown Inc. acquired Larson Company\'s net assets in exchange

Question

1. On January 1, 16 Brown Inc. acquired Larson Company's net assets in exchange for Brown's common stock with a par value of $100,000 and a fair value of $800,000. Brown also paid $10,000 in direct acquisition costs and $15,000 in stock issuance costs. On this date. Larson's condensed account balances showed the following Book Value $280,000 440,000 (100,000) 80,000 (140,000) (100,000) (200,000) (120,000) (140,000) Fair Value $370,000 480,000 Current Assets Plant and Equipment Accumulated Depreciation Intangibles - Patents Current Liabilities Long-Term Debt Common Stock Other Paid-in Capital Retained Earnings 120,000 (140,000) (110,000) Required: Record Brown's purchase of Larson Company's net assets. 2. Supemova Company had the following summarized balance sheet on December 31 of the current year

Explanation / Answer

Price paid for acquistion $       800,000 Fair value of assets acquired Current assets $     370,000 Plant and equipment $     480,000 Intangibles - patents $     120,000 Current liabilities $   (140,000) Long-term debt $   (110,000) $       720,000 Goodwill [800,000 - 720,000] $         80,000 Particulars Debit Credit Current assets $ 370,000.00 Plant and equipment $ 480,000.00 Intangibles - patents $ 120,000.00 Goodwill $ 80,000.00 Current liabilities $   140,000.00 Long-term debt $   110,000.00 Common Stock $   100,000.00 Paid-in Capital in Excess of Par $   700,000.00

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