Publix Corporation purchased the net assets (asset acquisition) of Sams Corporation on January 1, 2012 for $600,000 and also paid $10,000 in direct acquisition costs. Sams balance sheet on January 1, 2012 was as follows:

Book Value Book Value

AR -net $ 180,000 Current liabilities $ 70,000

Inventory 360,000 Long term debt 160,000

Land 40,000 Common stock ($1 par) 20,000

Building-net 60,000 APIC 430,000

Equipment-net 80,000 Retained earnings 40,000

Total assets $ 720,000 Total Liab. & Equity $ 720,000

NOTE 1: Fair values agree with book values except for inventory, land, and equipment. These three accounts had the following fair values:

Inventory Fair Value = $400,000

Land Fair Value = $50,000

Equipment Fair Value = $70,000

NOTE 2: Sams also has patent rights valued at $20,000.

Required:

Prepare Publixs general journal entry for the cash purchase of Sams net assets. For full credit show all calculations (show your work).

Calculations:

Fair Value Gave Up $_____________________

Fair Value Received $_____________________

Difference $_____________________

Journal Entry(s):

Assume Publix Corporation purchased the net assets of Sams Corporation for $530,000 rather than $600,000. How would the difference be accounted for?