Question

On January 1, 16 Dennis Inc. acquired Larson Company's net assets in exchange for Dennis common...

On January 1, 16 Dennis Inc. acquired Larson Company's net assets in exchange for Dennis common stock with a par value of $100,000 and a fair value of $800,000. Dennis also paid $10,000 in direct acquisition costs and $20,000 in stock issuance costs.

​

On this date, Larson's condensed account balances showed the following:

​

​

Book Value

Fair Value

Current Assets

$280,000

$370,000

Plant and Equipment

440,000

480,000

Accumulated Depreciation

(100,000)

​

Intangibles – Patents

80,000

130,000

Current Liabilities

(140,000)

(140,000)

Long-Term Debt

(100,000)

(110,000)

Common Stock

(200,000)

​

Other Paid-in Capital

(120,000)

​

Retained Earnings

(140,000)

​

​

Required:

​

Record the Journal entries of Dennis purchase of Larson Company.

Business   Accounting   
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Answer #1

Date Particulars Dr. Amt Cr Amt.

Jan 1,16 Current assets 370,000

Plant and Machinery 480,000

Intangibles-Patents 130,000

Current Liabilities 140,000  

Accumulated Depreciation 100,000

Long-Term Debt 110,000

Other Paid in Capital 120,000

Business Consideration A/C 510,000

Jan 1,16 Business ConsiderationA/C 5,10,000

Capital Reserve 1,90,000

Direct Acquisition Cost 10,000

Stock Issuance Cost 20,000

Common stock A/C 100,000

Premium on Issuance 600,000  

Profit & Loss A/C 30,000

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