On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows. Cash $50,400 Accounts payable $206,000 Accounts receivable 89,500 Stockholders’ equity 238,500 Inventory 105,000 $444,500 Land 41,500 Buildings (net) 75,300 Equipment (net) 70,900 Trademarks 11,900 $444,500 The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680). Prepare the July 1 entry for Martinez Corporation to record the purchase. Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440
On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows. Cash $50,400 Accounts payable $206,000 Accounts receivable 89,500 Stockholders’ equity 238,500 Inventory 105,000 $444,500 Land 41,500 Buildings (net) 75,300 Equipment (net) 70,900 Trademarks 11,900 $444,500 The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680). Prepare the July 1 entry for Martinez Corporation to record the purchase. Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On July 1, 2020, Martinez Corporation purchased Young Company by paying $259,000 cash and issuing a $128,000 note payable to Steve Young. At July 1, 2020, the
Cash
|
$50,400
|
Accounts payable
|
$206,000
|
|||
---|---|---|---|---|---|---|
|
89,500
|
|
238,500
|
|||
Inventory
|
105,000
|
$444,500
|
||||
Land
|
41,500
|
|||||
Buildings (net)
|
75,300
|
|||||
Equipment (net)
|
70,900
|
|||||
Trademarks
|
11,900
|
|||||
$444,500
|
The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $15,680).
Prepare the July 1 entry for Martinez Corporation to record the purchase.
Prepare the December 31 entry for Martinez Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $4,440
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