Question - P Company Acquired the assets and assumed the liabilities of S Company on January 1, 2014, for $510,000 when S Company's balance sheet was as follows:
|
Cash
|
$96,000
|
Account Payable
|
$44,400
|
|
Receivables
|
55,200
|
Bonds Payable, 10%
|
|
|
Inventory
|
110,400
|
Due 12/31/2019
|
480,000
|
|
Land
|
169,200
|
Common Stock, $2 par v.
|
120.000
|
|
Plant and Equipments (net)
|
466,800
|
Retained Earnings
|
253,200
|
|
Total
|
$897,600
|
Total
|
$897,600
|
Fair value of S Company's assets and liabilities were equal to their book values except for the following:
Inventory has a fair value of $126,000
Land has a fair value of $198,000
The bonds pay interest semiannually on June 30 and December 31. The current yield rate on bonds of similar risk is 8%
Required: Prepare journal entry on P Company's books to record the acquisition of the assets and assumption of the liabilities of S Company.