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Lambda LLC acquires all of Omega Ltd.'s assets and liabilities on January 1, 2026, for $22 million in cash. Omegas reported assets include current assets

  1. Lambda LLC acquires all of Omega Ltd.'s assets and liabilities on January 1, 2026, for $22 million in cash. Omega’s reported assets include current assets of $11 million and plant and equipment of $45 million. It reports current liabilities of $6 million and long-term debt of $20 million. Investigation reveals that Omega’s plant and equipment is undervalued by $1.5 million and it has an unreported trademark valued at $900,000.
    • Prepare the necessary journal entry on Lambda’s books to record its acquisition of Omega on January 1, 2026.
    • Assume that Lambda purchases all of Omega’s voting stock on January 1, 2026, for $22 million in cash. Prepare the necessary journal entry on Lambda’s books to record the acquisition.

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