Paul, Inc. acquired 100% of Ernie’s
Inc. net assets on January 1, 2009 for $300,000 in cash and paid 10,000 for
acquisition cost. The following facts relate to the acquisitions:
|
Accounts Receivable |
50,000 |
|
Inventory |
80,000 |
|
Equipment, Net |
50,000 |
|
Land and Building, Net |
120,000 |
|
Total Assets |
$300,000 |
|
Bonds Payable |
90,000 |
|
Common stock |
100,000 |
|
Retained earnings |
110,000 |
|
Total Liabilities and |
$300,000 |
|
Fair value of acquired net assets: |
|
|
Accounts receivable |
$50,000 |
|
Inventory |
100,000 |
|
Equipment |
30,000 |
|
Land and building |
180,000 |
|
Customer list |
30,000 |
|
Bonds payable |
100,000 |
In 3–5 pages, complete the
following:
- Determine and provide the proper accounting entry to
record the subsidiary on Paul’s books on January 1, 2009 as if Ernie was
dissolved. - Determine and provide the proper accounting entry to
record the subsidiary on Ernie’s books on January 1, 2009 as if Ernie was
dissolved. - While acquisitions are often friendly, there are
numerous occasions when a party does not want to be acquired. Discuss
possible defensive strategies that firms can implement to fend off a
hostile takeover attempt.
0 comments