Credit 400.000 300.000 Cash Accounts receivable Accounts Payable Common stock Add. paid-in capital Retained camnings Accumulated OCI Total 150,000 300.000 120.000 80,000 50.000 700,000 Cash Machine Building Goodwill Total Accounts payable Common stock Add, paid-in capital Retained carnings Accumulated OCI Total Book value 95.000 50,000 70,000 45,000 260.000 40.000 90,000 95.000 25,000 10,000 260.000 Fair value 95.000 40,000 90,000 0 225.000 40,000 700.000 Previously intangible assets not reported on Sloane's Balance sheet: Brand names S 50,000 Favorable lease agreements 15.000 Assembled workforce 60,000 Potential future contracts 52,000 Developed technology 80,000 Patel issued 25.000 shares of its $1 par value common stock at a market price of $17 per share to acquire all the Sloane's outstanding common stock. Patel paid $12,000 of legal fees to lawyers for this business combination, $4.000 finder's fee and $2,000 for issuing securities. Sloane is to continue its corporate existence as a wholly owned subsidiary of Patel Company. Patel's journal entries: AC 128,000 Finder fee stwing 2000 1 ,1 2 90,000 Record Acquisition Cost in the Investment Account-25,000x$17-$425,000 Fair value of identifiable net assets of Sloane =(225,000+50,000+15,000+80,000 ) - 40,000 - 330,000 or Book value of equityet assets (90,000+ 95,000+25,000+10,000)+( - 10,000+20,000- 45,000+50,000+15,000+80,000) - 330,000 Goodwill = Acquisition Cost-Fair value of net identifiable Assets (25,000 $17) - $330,000 = 95,000 (E) Comon Stock Add paid in Capital 95,000 Retained 25,000 Accumulated 10,0000 investment A Solond (E) eliminates subsidiary's stockholders' equity against parent's investment in subsidiary's book value of net assets. earnings