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Demeter Corp purchases all of Hestia Ltd.'s assets and liabilities on January 1, 2035, for $80 million in cash. At the date of acquisition, Hestia's
- Demeter Corp purchases all of Hestia Ltd.'s assets and liabilities on January 1, 2035, for $80 million in cash. At the date of acquisition, Hestia's reported assets include current assets of $40 million and plant and equipment of $200 million. It reports current liabilities of $70 million and long-term debt of $130 million. Investigation reveals that Hestia’s plant and equipment is overvalued by $6 million and it has an unreported customer database valued at $5 million.
- Prepare the necessary journal entry on Demeter’s books to record its acquisition of Hestia on January 1, 2035.
- Assume that Demeter purchases all of Hestia’s voting stock on January 1, 2035, for $80 million in cash. Prepare the necessary journal entry on Demeter’s books to record the acquisition.
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