Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved 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

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

image text in transcribed

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Risk Based Approach to Conducting a Quality Audit

Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg

10th edition

1305080572, 978-1305465664, 1305465660, 978-1305080577

More Books

Students also viewed these Accounting questions