In a pre-2009 business combination, Acme Company acquired all of Brem Companys assets and liabilities for cash. After the combination, Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts:

Book ValuesFair ValuesCurrent Assets$ 74,000$ 74,000Equipment141,000220,000Trademark0330,000Liabilities(70,400)(70,400)Common Stock(100,000)Retained Earnings(45,000)

In addition, Acme paid an investment bank $27,200 cash for assistance in arranging the combination.

A. Using the legacy purchase method for pre-2009 business combinations, prepare Acmes entry to record its acquisition of Brem in its accounting records assuming the following cash amounts of $672,000 and $432,000 were paid to the former owners of Brem.

B. How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method?

Transaction List:

1. Record the acquisition of Brem using the purchase method assuming $672,000 was paid to the former owners of Brem.
2. Record the acquisition of Brem using the purchase method assuming $432,000 was paid to the former owners of Brem.
3. Record the payment to an investment bank $27,200 cash for assistance in arranging the combination.
4. Record the acquisition of Brem using the acquisition method assuming $672,000 was paid to the former owners of Brem.
5. Record the expenses related to the combination using the acquisition method assuming $672,000 was paid to the former owners of Brem.
6. Record the acquisition of Brem using the acquisition method assuming $432,000 was paid to the former owners of Brem.
7. Record the expenses related to the combination using the acquisition method assuming $432,000 was paid to the former owners of Brem.

Journal Entry word bank:

1. No journal entry required
2. Cash
3. Common stock
4. Current Assets
5. Equipment
6. Gain on bargain purchase
7. Goodwill
8. Liabilities
9. Professional services expense
10. Receivables
11. Retained earnings
12. Trademark

Journal entry worksheet Record the acquisition of Brem using the purchase method assuming $672,000 was paid to the former owners of Brem. Note: Enter debits before credits