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Home / Questions / The following book and fair values were available for Westmont Company as of March 1.

The following book and fair values were available for Westmont Company as of March 1.

The following book and fair values were available for Westmont Company as of March 1.

 

  Book Value Fair Value
Inventory $ 296,000   $ 242,750  
Land   766,500     1,034,250  
Buildings   2,150,000     2,453,000  
Customer relationships   0     846,750  
Accounts payable   (106,500 )   (106,500 )
Common stock   (2,000,000 )      
Additional paid-in capital   (500,000 )      
Retained earnings 1/1   (428,000 )      
Revenues   (467,000 )      
Expenses   289,000        
 

 

Arturo Company pays $3,400,000 cash and issues 25,400 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont’s common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,300 and Arturo pays $51,100 for legal fees to complete the transaction.

 

Prepare Arturo’s journal entry to record its acquisition of Westmont. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Sep 17 2020 View more View Less

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