Home / Questions / Bargain Purchase Bower Company purchased Lark Corporation’s net assets on January 3, 20X2
Bargain Purchase
Bower Company purchased Lark Corporation’s net assets on January 3, 20X2, for $625,000 cash. In addition, Bower incurred $5,000 of direct costs in consummating the combination. At the time of acquisition, Lark reported the following historical cost and current market data:
|
Balance Sheet Item |
Book Value |
Fair Value |
|
Cash & Receivables |
$ 50,000 |
$ 50,000 |
|
Inventory |
100,000 |
150,000 |
|
Buildings & Equipment (net) |
200,000 |
300,000 |
|
Patent |
— |
200,000 |
|
Total Assets |
$350,000 |
$700,000 |
|
Accounts Payable |
$ 30,000 |
$ 30,000 |
|
Common Stock |
100,000 |
|
|
Additional Paid-In Capital |
80,000 |
|
|
Retained Earnings |
140,000 |
|
|
Total Liabilities & Equities |
$350,000 |
Required
Give the journal entry or entries with which Bower recorded its acquisition of Lark’s net assets.
Nov 24 2017 Read more Less More
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