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PROBLEM 1 Gull Company ( Investor ) purchased the net assets of Hart Company ( Investee ) on January 1 , 2 0 X 1
PROBLEM
Gull Company Investor purchased the net assets of Hart Company Investee on January X
and made the following entry to record the purchase:
Current Assets....
Equipment.
Land.
Buildings
Goodwill.
Liabilities
Common Stock $ par
PaidIn Capital in Excess of Par.
Make the required entry on January X for each of the following independent
contingency agreements:
Added shares would be issued on January to compensate for any fall in the value of
Gull common stock below $ per share. The settlement would be to cure the deficiency by
issuing added shares based on their fair value on January X The market price of the
shares on January was $
An additional cash payment would be made on January equal to twice the amount
by which average annual earnings of the Hart Division exceed $ per year, prior to
January Net income was $ in and $ in Assume that the
liabilities recorded on January X include an estimated contingent liability recorded at
an estimated amount $
Added shares would be issued on January equal in value to twice the amount by
which average annual earnings of the Hart Division exceed $ per year, prior to January
Net income was $ in and $ in The market price of the
shares on January was $
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