Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2020, AMI Corporation purchased the non-cash net assets of Martinez Ltd. for $8,652,700. Following is the statement of financial position of Martinez
On January 1, 2020, AMI Corporation purchased the non-cash net assets of Martinez Ltd. for $8,652,700. Following is the statement of financial position of Martinez Ltd. from the company's year-end the previous day:
Martinez Ltd. Statement of Financial Position As at December 31, 2019 | ||
Cash | $610,000 | |
Accounts receivable | 557,000 | |
Inventory | 2,570,000 | |
Property, plant, and equipment (net) | 2,140,000 | |
Land | 2,580,000 | |
$8,457,000 | ||
Accounts payable | $337,000 | |
Common shares | 2,590,000 | |
Retained earnings | 5,530,000 | |
$8,457,000 |
As part of the negotiations, AMI and Martinez agreed on the following fair values for the items on Martinez's statement of financial position:
Accounts receivable | $555,500 | |
Inventory | 2,315,000 | |
Property, plant, and equipment | 1,985,000 | |
Land | 4,030,000 | |
Accounts payable | 326,800
| |
| ||
Prepare the journal entry on the books of AMI Corporation to record the purchase of the net assets of Martinez Ltd, assuming AMI paid cash for the net assets. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Accounts Receivable Inventory Property, Plant and Equipment Land Goodwill > > Prepare the journal entry on the books of AMI Corporation to record the purchase, assuming that instead of buying the net assets of Martinez, AMI purchased all of the company's shares, instead. (If no entry is required, select "No Entry" for the account itles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started