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Assume that an investor purchases the business of an investee. The fair value of the investee company is equal to its reported book value and
Assume that an investor purchases the business of an investee. The fair value of the investee company is equal to its reported book value and the fair values of the individual net assets are equal to their reported book values. The investee company reports the following balance sheet on the acquisition date: Cash $1,120 Accounts payable $2,240 Accounts receivable 2,240 Accrued liabilities 3,360 Inventories 4,480 - Current assets 7,840 Current liabilities 5,600 Long-term liabilities 4,480 PPE, net 11,200 Stockholders equity 8,960 Total assets $19,040 Total liabilities and equity $19,040 Parts a. and b. are independent of each other. a. Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investe
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