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Hermes Inc. acquires all of Dionysus Co.'s assets and liabilities on January 1, 2036, for $85 million in cash. Dionysuss reported assets consist of current
- Hermes Inc. acquires all of Dionysus Co.'s assets and liabilities on January 1, 2036, for $85 million in cash. Dionysus’s reported assets consist of current assets of $42 million and plant and equipment of $220 million. It reports current liabilities of $75 million and long-term debt of $140 million. Investigation reveals that Dionysus’s plant and equipment is undervalued by $9 million and it has an unreported brand value of $6 million.
- Prepare the necessary journal entry on Hermes’s books to record its acquisition of Dionysus on January 1, 2036.
- Assume that Hermes purchases all of Dionysus’s voting stock on January 1, 2036, for $85 million in cash. Prepare the necessary journal entry on Hermes’s books to record the acquisition.
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