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Pun Corporation concluded the fair value of Slender Company was $67,000 and paid that amount to acquire its net assets. Slender reported assets with a book value of $53,000 and fair value of $64,000 and liabilities with a book value and fair value of $21,000 on the date of combination. Pun also paid $14,000 to a search firm for finder’s fees related to the acquisition.

Required:
Prepare the journal entries to be made by Pun to record its investment in Slender and its payment of the finder's fees.

Respuesta :

Parrain

Answer:

DR Assets ...............................................................$64,000

DR Goodwill ...........................................................$24,000

CR Liabilities ..............................................................................$21,000

CR Cash.......................................................................................$67,000

(To record Acquisition of Slender Assets)

Working

Goodwill = Cash - (Assets - Liabilities)

= 67,000 - (64,000 - 21,000)

= $24,000

DR Merger ...................................................................$14,000

CR Cash........................................................................................$14,000

(To record payment of finder's fee)

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