EXERCISE 23 Asset Purchase, Cash and Stock Pretrel Company acquired the sets (except for cash) and assumed the liabilities of Salt Com pany on January 2, 2012. As compensation, Pretul Company gave 50,000 shares of its common stock, 15.000 shares of its 10% preferred stock, and cash of $50,000 to the stockholders of Sale Company. On the acquisition date, Pretre Company stock had the following characteristics PRETZEL COMPANY Per Fair Common $ 10 $ 35 Preferred 100 100 Immediately prior to the acquisition, Salt Company's balance sheet reported the following book values and fair values SALT COMPANY Balance Sheet January 2, 2012 Baai ) Fair Cash $ 165,000 $ 165,000 Accounts receivable (net of $11,000 allowance) 220,000 198.000 Inventory-UIPO CON 275,000 330,000 Land 396,000 550.000 ildings and equipment (net) 1.144000 1.144.000 Walets $2,200,000 $2,387,000 Current liabilities $ 275,000 $ 275,000 Bonde Payable, 10% 450,000 195.000 Common stock. $5 par value 770,000 Other contributed capital 396,000 Remained earning 300,000 Total liabilities and stockholders' equity $2,200,000 Required: Prepare the journal entry on the books of Pretrel Company to record the acquisition of the assets and assumption of the liabilities of Salt Company EXERCISE 4-1 2011 Parent Company Entries, Liquidating Dividendo Percy Company purchased 80% of the outstanding voting shares of Song Company at the be ginning of 2009 for $387,000. At the time of purchase, Song Company's total stockholders' equity amounted to $475,000. Income and dividend distributions for Song Company from 2009 through 2011 are as follow 2009 2010 Net income dow) $68,500 $32,500 ($55,000) Dividend distribution 25,000 50,000 35,000 Required: Prepare journal entries on the books of Percy Company from the date of purchase through 2011 to account for its investment in Song Company under each of the following assumption A. Percy Company uses the cost method to record its investment. B. Perey Company uses the partial equity method to record its investment C. Percy Company uses the complete equity method to record its investment. The difference between book value of equity acquired and the value implied by the purchase price was attributed solely to an excess of market over book values of depreciable assets, with a re maining life of 10 years