On July 1, 2020, Hedwig Emporiums purchased Nargle Enterprises by paying $300,000 cash and issuing $200,000 note payable to Luna Lovely. At July 1, 2020, the balance sheet of Nargle Enterprises was as follows: A/R $50,000 Inventory $110,000 Land $45,000 Buildings (net) $80,000 Equipment (net) $65,000 Trademarks $5,000 Accounts Payable $200,000 Equity $155,000 The recorded amounts all approximate current values except for land (undervalued $10,000), inventory (overvalued $10,000) and trademarks (fair value $30,000). Assume the note was issued at par value. Prepare the July 1 entry to record purchase of Nargle Enterprises Prepare the December 31 entry to record amortization of Trademarks assuming a 5 year usual life
On July 1, 2020, Hedwig Emporiums purchased Nargle Enterprises by paying $300,000 cash and issuing $200,000 note payable to Luna Lovely. At July 1, 2020, the balance sheet of Nargle Enterprises was as follows: A/R $50,000 Inventory $110,000 Land $45,000 Buildings (net) $80,000 Equipment (net) $65,000 Trademarks $5,000 Accounts Payable $200,000 Equity $155,000 The recorded amounts all approximate current values except for land (undervalued $10,000), inventory (overvalued $10,000) and trademarks (fair value $30,000). Assume the note was issued at par value. Prepare the July 1 entry to record purchase of Nargle Enterprises Prepare the December 31 entry to record amortization of Trademarks assuming a 5 year usual life
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2020, Hedwig Emporiums purchased Nargle Enterprises by paying $300,000 cash and issuing $200,000 note payable to Luna Lovely. At July 1, 2020, the balance sheet of Nargle Enterprises was as follows:
A/R $50,000
Inventory $110,000
Land $45,000
Buildings (net) $80,000
Equipment (net) $65,000
Trademarks $5,000
Accounts Payable $200,000
Equity $155,000
The recorded amounts all approximate current values except for land (undervalued $10,000), inventory (overvalued $10,000) and trademarks (fair value $30,000). Assume the note was issued at par value.
- Prepare the July 1 entry to record purchase of Nargle Enterprises
- Prepare the December 31 entry to record amortization of Trademarks assuming a 5 year usual life
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