Question
Problem 2-29 (LO 2-4, 2-6, 2-9) On June 30, 2015, Streeter Company reported the following account balances: Receivables $ 69,300 Current liabilities $ 19,700 Inventory
Problem 2-29 (LO 2-4, 2-6, 2-9)
On June 30, 2015, Streeter Company reported the following account balances: |
Receivables | $ | 69,300 | Current liabilities | $ | 19,700 | |
Inventory | 79,750 | Long-term liabilities | 57,250 | |||
Buildings (net) | 85,000 | Common stock | 90,000 | |||
Equipment (net) | 32,900 | Retained earnings | 100,000 | |||
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Total assets | $ | 266,950 | Total liabilities and equities | $ | 266,950 | |
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On June 30, 2015, Princeton paid $320,200 cash for all assets and liabilities of Streeter, which will cease to exist as a separate entity. In connection with the acquisition, Princeton paid $15,700 in legal fees. Princeton also agreed to pay $61,500 to the former owners of Streeter contingent on meeting certain revenue goals during 2016. Princeton estimated the present value of its probability adjusted expected payment for the contingency at $19,400. |
In determining its offer, Princeton noted the following pertaining to Streeter: |
It holds a building with a fair value $43,000 more than its book value. | |
It has developed a customer list appraised at $28,400, although it is not recorded in its financial records. | |
It has research and development activity in process with an appraised fair value of $36,700. However, the project has not yet reached technological feasibility and the assets used in the activity have no alternative future use. | |
Book values for the receivables, inventory, equipment, and liabilities approximate fair values. | |
On July 15, 2015, Princeton obtained possession of the assets and recorded them on their accounting records. | |
Prepare Princetons accounting entries to record the combination with Streeter. (If no entry is required for a transaction, select "No journal entry required" in the first account field.) |
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