1. Parchesi, Inc. will acquire the net assets of Scrabble, Inc. for cash. Parchesi, which has a 30% marginal tax rate, will incur $25,000 of direct acquisition costs. Scrabbles balance sheet follows:

Assets

Accounts Receivable $ 30,000

Inventory 90,000

Equipment $ 80,000

Accumulated Depreciation (50,000) 30,000

Land 50,000

Buildings $ 300,000

Accumulated Depreciation (100,000) 200,000

Total Assets $ 400,000

Liabilities and Stockholders Equity

Bonds Payable $ 80,000

Common Stock, $1 Par 160,000

Paid-in-capital in excess of par 80,000

Retained Earnings 80,000

Total Liabilities and Stockholders Equity $ 400,000

Parchesi has secured appraisals indicating the following market values of Scrabbles accounts and embeds this evidence into its decision to pay the indicated purchase price below:

Accounts Receivable $ 30,000

Inventory 95,000

Equipment 40,000

Land 50,000

Buildings 250,000

Bonds Payable 75,000

Parchesi reports financial results on a calendar year basis. Ignore any tax effects.

REQUIRED:

In a WORD PROCESEDdocument, make the entries to record this purchase, showing your work to support your entries, using the following two independent assumptions:

Purchase Method effective through 12/15/2008, after 12/15/2008 Acquisition method used

1. Assume Parchesi paid $400,000 on 1/2/20 for Scrabbles net assets. What if the purchase date was 1/2/08 how does your answer change?
2. Assume Parchesi paid $300,000 on 1/2/20 for Scrabbles net assets. What if the purchase date was 1/2/08 how does your answer change?