question 1

QUESTIONS Question 1 (50 points). Flower Company was established on January 1, 2017. Along with other assets, it immediately purchased land for $100,000, and a building $180,000. On January 1, 2021, Flower transferred these assets, cash of $30,000, and inventory costing $50,000 to a newly created subsidiary. Sparrow Company, in exchange for 40,000 shares of Sparrow's $5 par value stock. Flower uses straight line depreciation and useful life of 30 years for the building with no estimated residual values Required: 2. Give the journal entry that Flower recorded for the transfer of assets and liabilities to Sparrow (25 points). b. Give the journal entry that Sparrow recorded for the receipt of assets and liabilities from Flower (25 points). Assets Question 2 (50 points). On January 1, 2021, Party Corporation acquired Surprise Corporation's net assets by paying C220,000 cash. Balance sheet data for the Party & Surprise and fair value information for Surprise immediately before the business combination are given below: Party Surprise Book Value Book Value Fair Value Cash & receivables C250,000 43,500 43,500 Inventory 100,000 35,000 39,000 Land 120,000 75,000 85,000 Plant, Property and Equipment 235,000 145,000 110,000 Less: Accumulated Depreciation - 135,000 83,000 Total 6570.000 215.500 (277.500 Liabilities and Stockholders' Equity Accounts Payable 72.000 35,000 37,500 Notes Payable 150,000 12.500 12.500 Bonds payable 100,000 35,000 35,000 Common Stock 60,000 30,000 Additional Paid-in Capital 90,000 70,000 Retained Earnings 98,000 33,000 Total 570.000 215.500 Required: 2. Prepare the journal entry to record the acquisition of Surprise Corporation. (35 points). b. What would the balance of land be in the balanced sheet of combined company immediately after the combination? (5 points). c. What would the balance of accounts payable be in the balanced sheet of combined company immediately after the combination? (5 points). d. What would the balance of common stock be in the balance sheet of combined company immediately after the combination? (5 points)