Question
Saxton Corporation purchases all of Taylor Company's assets and liabilities on January 1, 2013, for $60 million in cash. At the date of acquisition, Taylor's
Saxton Corporation purchases all of Taylor Company's assets and liabilities on January 1, 2013, for $60 million in cash. At the date of acquisition, Taylor's reported assets consist of current assets of $50 million and plant and equipment of $250 million. It reports current liabilities of $80 million and long-term debt of $200 million. Investigation reveals that Taylor's plant and equipment is overvalued by $9 million and it has an unreported customer database valued at $2.5 million.
a. Prepare the necessary journal entry on Saxton's books to record its acquisition of Taylor on January 1, 2013.
Enter your answers in thousands. For example, $1 million = $1,000 or $500,000 = $500.
General Journal | ||
---|---|---|
Description | Debit | Credit |
Current assets | Answer | Answer |
Plant and equipment | Answer | Answer |
Customer database | Answer | Answer |
AnswerGoodwillCashInvestment in TaylorEquity in net income of TaylorRetained earnings | Answer | Answer |
Current liabilities | Answer | Answer |
Long-term debt | Answer | Answer |
AnswerGoodwillCashInvestment in TaylorEquity in net income of TaylorRetained earnings | Answer | Answer |
b. Assume that Saxton purchases all of Taylor's voting stock on January 1, 2013, for $60 million in cash. Prepare the necessary journal entry on Saxton's books to record the acquisition.
Enter your answers in thousands. For example, $1 million = $1,000 or $500,000 = $500.
General Journal | ||
---|---|---|
Description | Debit | Credit |
AnswerGoodwillCashInvestment in TaylorEquity in net income of TaylorRetained earnings | Answer | Answer |
AnswerGoodwillCashInvestment in TaylorEquity in net income of TaylorRetained earnings | Answer | Answer |
Saxton Corporation purchases all of Taylor Company's assets and liabilities on January 1, 2013, for $60 million in cash. At the date of acquisition, Taylor's reported assets consist of current assets of $50 million and plant and equipment of $250 million. It reports current liabilities of 580 million and long-term debt of $200 million. Investigation reveals that Taylor's plant and equipment is overvalued by $9 million and it has an unreported customer database valued at $2.5 million. a. Prepare the necessary journal entry on Saxton's books to record its acquisition of Taylor on January 1, 2013. Enter your answers in thousands. For example, 51 million = $1,000 or $500,000 = $500. General Journal Description Debit Credit Current assets Plant and equipment Customer database 0 0 Current liabilities 0 0 Long term deb 0 0 . 0 D b. Assume that Saxton purchases all of Taylor's voting stock on January 1, 2013, for $60 million in cash. Prepare the necessary journal entry on Saxton's books to record the acquisition. Enter your answers in thousands. For example, 51 million = $1,000 or $500,000 - $500. General Journal Description Debit Credit
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