On August 15, 2016, Willis Inc. acquired all of the outstanding common stock of
ID: 2485547 • Letter: O
Question
On August 15, 2016, Willis Inc. acquired all of the outstanding common stock of Bork Inc. paying $7,400,000 cash. The book values and fair values of Bork assets and liabilities are listed below:
Book Value Fair Value
Accounts Receivable 1,080,000 975,000
Inventories 1,620,000 2,400,000
Property, Plant, Equipment 5,400,000 6,975,000
Accounts Payable 1,800,000 1,800,000
Bonds Payable 2,700,000 2,475,000
Prepare the journal entry to record the acquisition by Willis Inc.
Explanation / Answer
DESCRIPTION
AMOUNT $
AMOUNT $
Accounts Recrivables
975000
Inventories
2400000
PROPERTY PLANT EQUIPEMENT
6975000
GOODWILL (BALANCING FIGURE)
1325000
ACCOUNTS PAYBLE
1800000
Bonds Payable
2475000
CASH
7400000
DESCRIPTION
AMOUNT $
AMOUNT $
Accounts Recrivables
975000
Inventories
2400000
PROPERTY PLANT EQUIPEMENT
6975000
GOODWILL (BALANCING FIGURE)
1325000
ACCOUNTS PAYBLE
1800000
Bonds Payable
2475000
CASH
7400000
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