During the current year, Brewer Company acquired all of the outstanding common s
ID: 2471343 • Letter: D
Question
During the current year, Brewer Company acquired all of the outstanding common stock of Miller Inc. paying $12,000,000 cash. The book values and fair values of the Miller's assets and liabilities acquired are listed below:
Book Value Fair Value
Accounts Receivable $1,800,000 $1,625,000
Inventories 2,700,000 4,000,000
Property, plant & equipment 9,000,000 11,625,000
Accounts Payable 3,000,000 3,000,000
Bonds Payable 4,500,000 4,125,000
Prepare the journal entry to record the acquisition by Brewer Company.
Explanation / Answer
Brewer Company acquired all of the outstanding common stock of Miller Inc Paying $ 12,000,000 cash.
The Fair Values consider for Journal entry, then
Debit Accounts Receivable $ 1,625,000
Debit Inventories $ 4,000,000
Debit Property, Plant & Equipment $ 11,625,000
Debit Goodwill $ 1,875,000
Credit Accounts Payable $ 3,000,000
Credit Bonds Payable $ 4,125,000
The Goodwill amount is difference between Assets and Laibilities at Fair Value.
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