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Acquisition Using Debentures Fortune Corporation used debentures with a par value of $625,

Acquisition Using Debentures

Fortune Corporation used debentures with a par value of $625,000 to acquire 100 percent of Sorden Company’s net assets on January 1, 20X2. On that date, the fair value of the bonds issued by Fortune was $608,000. The following balance sheet data were reported by Sorden:

Balance Sheet Item

Historical Cost

Fair Value

Cash & Receivables

$ 55,000

$ 50,000

Inventory

105,000

200,000

Land

60,000

100,000

Plant & Equipment

400,000

300,000

Less: Accumulated Depreciation

(150,000)

 

Goodwill

10,000

 

Total Assets

$480,000

$650,000

Accounts Payable

$ 50,000

$ 50,000

Common Stock

100,000

 

Additional Paid-In Capital

60,000

 

Retained Earnings

270,000

 

Total Liabilities & Equities

$480,000

 

Required

Give the journal entry that Fortune recorded at the time of exchange.

Nov 24 2017 View more View Less

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