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Art Incorporateds statement of financial position as at June 30, Year 8, is as follow: Art Incorporated Statement of Financial Position As of June 30,

Art Incorporateds statement of financial position as at June 30, Year 8, is as follow:

Art Incorporated

Statement of Financial Position

As of June 30, Year 8

Carrying Value Fair Market Value
Cash $ 15,000 $ 15,000
Accounts receivable 23,000 20,000
Inventory 115,500 120,000
Property, Plant and Equipment (net) 854,000 780,000
Land 250,000 380,000
Total assets $ 1,257,500
Current liabilities $ 54,000 $ 54,000
Long-term debt 335,000 300,000
Common shares 450,000
Retained earnings 418,500
Total liabilities and equities $ 1,257,500

On July 1, Year 8, Historical Corp purchase the net asset of Art Incorporated for $1,000,000

Required

a) Prepare the journal entries in the accounting records of Historical Corp to record the business combinations. (10 marks)

b) Prepare the journal entries in the accounting records of Art Incorporated to record the sale of the net asset. (10 marks)

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