Question - On July 1, 2017, Indigo Corporation purchased Young Company by paying $256,500 cash and issuing a $149,000 note payable to Steve Young. At July 1, 2017, the balance sheet of Young Company was as follows.
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Cash
|
$51,500
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Accounts payable
|
$207,000
|
|
Accounts receivable
|
91,500
|
Stockholders' equity
|
236,200
|
|
Inventory
|
103,000
|
|
$443,200
|
|
Land
|
40,300
|
|
|
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Buildings (net)
|
75,300
|
|
|
|
Equipment (net)
|
70,300
|
|
|
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Trademarks
|
11,300
|
|
|
|
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$443,200
|
|
|
The recorded amounts all approximate current values except for land (fair value of $63,700), inventory (fair value of $125,500), and trademarks (fair value of $15,200).
Prepare the July 1 entry for Indigo Corporation to record the purchase.
Prepare the December 31 entry for Indigo Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,280.