On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire theseshares, Presidio issued to the owners of Mason $306,000 in long-term liabilities and 20,000 shares of common stock having a parvalue of $1 per share but a fair value of $10 per share. Presidio paid $27,500 to accountants, lawyers, and brokers for assistance in theacquisition and another $12,500 in connection with stock issuance costs.Prior to these transactions, the balance sheets for the two companies were as follows:PresidioCompany$ 66,600362,000362,000213,000515,000CashItemsReceivablesInventoryLandBuildings (net)Equipment (net)Accounts payableLong-term liabilities168,000(193,000)(454,000)(110,000)Common stock-$1 par valueCommon stock-$20 par valueAdditional paid-in capitalRetained earnings, 1/1/24Note: Parentheses indicate a credit balance.0(360,000)(569,600)Mason Company$ 28,800166,000206,000184,000292,00074,100(61,800)(306,000)(120,000)(463,100)00Presidio's appraisal of Mason's fair values deemed three accounts to be undervalued: Inventory by $9,800, Land by $23,400, andBuildings by $35,600. Presidio plans to maintain Mason's separate legal identity and to operate Mason as a wholly owned subsidiary.Required:a. Prepare Presidio's journal entries to record its acquisition of Mason, related professional fees paid, and stock acquisition costs.

Journal entry records the accounting transactions of a business in a journal book. All the business…

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $306,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $27,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,500 in connection with stock issuance costs.

On January 1, 2024, Presidio Company acquired 100 percent of the outstanding common stock of Mason Company. To acquire these shares, Presidio issued to the owners of Mason $306,000 in long-term liabilities and 20,000 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Presidio paid $27,500 to accountants, lawyers, and brokers for assistance in the acquisition and another $12,500 in connection with stock issuance costs.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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