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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,

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.

Roshan kumar 24-Nov-2017

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