Effects of qualifying as a business on asset acquisitions

Assume that on January $1,2016$ an investor company paid $$8,700$ to an investee company in exchange for the following assets and liabilities transferred from the investee company:

Asset $($Liability$)$ Investee's

Book Value Estimated Fair

Value

Production equipment $$900$ $$780$

Factory $4,5004,290$

Land $3001,170$

Patents $-1,560$

In addition, the investor provided to the seller contingent consideration with a fair value of $$200$ and the investor paid an additional $$300$ of transaction costs to an unaffiliated third party. The contingent consideration has a potential settlement value of $$450$ in two years, and is not a derivative financial instrument. The book values are from the investee$$s financial records immediately before the exchange. The fair values are measured in accordance with FASB ASC $820$: Fair Value Measurement.

Parts a$.$ and b$.$ are independent of each other.

If no additional debit or credit entries are required, select $"$No entry" as the answer.

a$.$ Provide the journal entry recorded by the investor company assuming that the net assets transferred from the investee do not qualify as a $$business$,$ as that term is defined in FASB ASC Master Glossary.

General Journal

Description Debit Credit

Production equipment Answer

$0$

Answer

$0$

Factory Answer

$0$

Answer

$0$

Land Answer

$0$

Answer

$0$

Patents Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Cash Answer

$0$

Answer

$0$

b$.$ Provide the journal entry recorded by the investor company assuming that the net assets transferred from the investee qualify as a $$business$,$ as that term is defined in FASB ASC Master Glossary.

General Journal

Description Debit Credit

Production equipment Answer

$0$

Answer

$0$

Factory Answer

$0$

Answer

$0$

Land Answer

$0$

Answer

$0$

Patents Answer

$0$

Answer

$0$

Answer

Goodwill

Answer

$0$

Answer

$0$

Answer

Transaction expense

Answer

$0$

Answer

$0$

Answer

Contingent consideration

Answer

$0$

Answer

$0$

Cash Answer

$0$

Answer

$0$