Exercise 12-12 On July 1, 2017, Grouper Corporation purchased Young Company by p

Question

Exercise 12-12 On July 1, 2017, Grouper Corporation purchased Young Company by paying $259,700 cash and issuing a $149,000 note payable to Steve Young. At July 1, 2017, the balance sheet of Young Company was as follows Cash Accounts receivable Inventory Land Buildings (net) Equipment (net) Trademarks $50,600 92,000 105,000 41,800 75,500 71,400 11,400 $447,700 Accounts payable $205,000 Stockholders' equity242,700 $447,700 The recorded amounts all approximate current values except for land (fair value of $64,500), inventory (fair value of $126,800), and trademarks (fair value of $17,280)

Explanation / Answer

2) Dr Amortization Expense $825

Cr Trademarks $825

Trademarks = ([$11,400 - $4,800] x 1/4 x 6/12 = $825

Account Titles and Explanation Debit Credit Cash $          50,600 Accounts Receivable $          92,000 Inventory $        126,800 Land $          64,500 Buildings $          75,500 Equipment $          71,400 Trademarks $          17,280 Goodwill $        115,620 Cash $ 259,700 Accounts Payable $205,000 Notes Payable $149,000

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