Assume an investor purchases the business of an investee for $ The fair values of the individual net assets are equal to their reported book values. The investee company reports the following balance sheet on the acquisition date:
Current assets $ Current liabilities $
Property, plant and equipment, net Longterm liabilities
Stockholders equity
Total assets $ Total liabilities & equity $
Parts a and b are independent of each other.
a Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company.
Debit Credit
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to record the acquisition
b Provide the journal entry if the investor pays cash and purchases all of the stock of the investees shareholders.
Debit Credit
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to record the acquisitionParts and are independent of each other.
a Provide the journal entry if the investor pays cash and purchases the assets and assumes the liabilities of the investee company.
b Provide the journal entry if the investor pays cash and purchases all of the stock of the investee's shareholders.
