Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

In a pre-2009 business combination, Acme Company acquired all of Brem Company’s 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 Values
Current assets$81,800$81,800
Equipment131,000198,000
Trademark0352,000
Liabilities(67,800)(67,800)
Common stock(100,000)
Retained earnings(45,000)

In addition, Acme paid an investment bank $31,200 cash for assistance in arranging the combination.

Using the legacy purchase method for pre-2009 business combinations, prepare Acme’s entry to record its acquisition of Brem in its accounting records assuming the following cash amounts of $690,400 and $439,400 were paid to the former owners of Brem.

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

(If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations.)

1. Record the acquisition of Brem using the purchase method assuming $690,400 was paid to the former owners of Brem

2. Record the acquisition of Brem using the purchase method assuming $439,400 was paid to the former owners of Brem

3. Record the acquisition of Brem using the acquisition method assuming $690,400 was paid to the former owners of Brem

4. Record the expenses related to the combination using the acquisition method assuming $690,400 was paid to the former owners of Brem

5. Record the acquisition of Brem using the acquisition method assuming $439,400 was paid to the former owners of Brem

6. Record the expenses related to the combination using the acquisition method assuming $439,400 was paid to the former owners of Brem

Step by Step Solution

3.29 Rating (164 Votes )

There are 3 Steps involved in it

Step: 1

answer 1 current assets ac Dr 81800 equipment ac Dr 198000 trademark ac D... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Advanced Accounting

Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik

6th edition

0-07-786223-6, 101259095592, 13: 978-0-07-7, 13978125909559, 978-0077862237

Students also viewed these Accounting questions