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GEO COMPANY
Journal Entries
March 31, 2005
Current Assets $-
Plant Assets $180,000
Long-term Debt $10,000 $810,000
Goodwill $(10,000)
Current Assets $-
Plant Assets $920,000
Other Assets $140,000
Discount on Long-Term Debt $10,000
Goodwill $10,000
Current Liabilities $80,000
Long-Term Debt $200,000
Investm ent in GEO Company
($700,000 + $100,000) $800,000
$1,080,000 $1,080,000
0,000+$70,000+$20,000)
270,000)
On March 31, 2005, Combinor Company issued 100,000 shares of its $1 par common stock
(current fair value $5 a share) for the net assets of Combinee Company. Also on that date,
Combinor paid the following out-of-pocket costs in connection with the combination:
COMBINEE COMPANY
Balance Sheet (prior to Business combination)
March 31, 2005
Carrying Current Fair
Amnts Values
Assets
Current Assets $200,000 $260,000
Plant Assets (net) $400,000 $480,000
Other Assets (none intangible) $140,000 $150,000
Total Assets $740,000 $890,000
COMBINOR COMPANY
Journal Entries
March 31, 2005
Debit
Investment in Combinee Company common stock
(100,000 x $5) $500,000
Common Stock (100,000 x $1)
Paid-in Capital in Excess of Par
Difference
$(60,000)
$(80,000)
$(10,000)
$(150,000)
Credit
$100,000
$400,000
$120,000
$80,000
$260,000
$570,000
On January 31, 2005, La Salle Corporation acquired for $540,000 cash all the net assets
except cash of De Soto Company and paid $60,000 cash to a law firm for legal services in
connection with the business combination. The balance sheet of De Soto Company on Jan-
uary 31, 2005, prior to the business combination, was as follows:
DE SOTO COMPANY
Balance Sheet (prior to Business combination)
January 31, 2005
Carrying Current Fair
Amnts Values Difference
Assets
Cash $40,000
Other current assets (net) $280,000 $300,000 $(20,000)
Plant assets (net) $760,000 $874,000 $(114,000)
Intangible asset (net) $120,000 $76,000 $44,000
Total assets $1,200,000 $1,250,000 $(90,000)
La Salle Corporation
Journal Entries
March 31, 2005
Debit Credit