Question
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows:
Book Value Dr (Cr) | Fair Value Dr (Cr) | |
Current assets | $ 500,000 | $ 700,000 |
Land, buildings and equipment (net) | 2,000,000 | 3,500,000 |
Liabilities | (600,000) | (550,000) |
Capital stock | (500,000) | |
Retained earnings | (1,400,000) |
In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair value of $400,000. In eliminating entry (R) on the consolidation working paper, the debit to identifiable intangibles is:
Select one:
A. $0
B. $400,000
C. $350,000
D. $250,000
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