Texts: EJERCICIO III-SIMPLE AVERAGE ANALYSIS (Recording purchase with goodwill)
Rosie Corp purchased all the outstanding stock of Mariely Corp for $950,000. Rosie also paid $10,000 in direct acquisition costs. Just before the investment, the two companies had the following balance sheet:
Balance Sheet
Assets
Rosie $900,000 600,000 1,500,000 $3,000,000
Mariely $500,000 200,000 600,000 $1,300,000
Accounts Receivable Inventory Property Plant & Equipment (net) Total Assets
Liabilities and Equity
Current Liabilities Bond Payable Common Stock ($10 par) Paid-in capital in excess of par Retained Earnings Total Liabilities and Equity
$950,000 500,000 400,000 500,000 650,000 $3,000,000
$400,000 200,000 300,000 380,000 20,000 $1,300,000
Appraisals for the assets of Mariely indicate that fair values differ from recorded book values for the inventory and for the Property, Plant & Equipment (net assets), which have fair values of $250,000 and $700,000, respectively.
Instructions:
1. Prepare the entries to record the purchase of the Mariely Corp common stock and payment of acquisition costs.
Date
Account Name
Debit
Credit
