On July 1, 2010, ABC Co. purchased the net assets of XYZ Co. for $356,250...
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On July 1, 2010, ABC Co. purchased the net assets of XYZ Co. for $356,250 (cash of $106,250 and a short-term note payable of $250,000). The assets included current assets of $156,250, property, plant, and equipment with a fair value of $312,500 (book value of $375,000), and a trademark valued at $187,500. ABC Co. assumed liabilities totaling $250,000. The entry to record the purchase would include:
A debit to Goodwill of $90,000
A credit to Gain on Purchase of $90,000
A credit to Goodwill of $50,000
A credit to Gain on Purchase of $50,000
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