As of January 1, Year One, Company Z has no liabilities and only two assets:...
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Accounting
As of January 1, Year One, Company Z has no liabilities and only two assets: a donut maker with a net book value of $300,000 (and a fair value of $360,000) and a cookie machine with a net book value of $400,000 (and a fair value of $440,000). Each of these assets has a remaining useful life of ten years and no expected residual value. Company A offers $1 million to acquire all of the ownership of Company Z. The owners of Company Z hold out and manage to get $1.2 million in cash. a. Make the journal entry to be recorded by Company A for this acquisition. b. What depreciation/amortization expense will Company A recognize in connection with these acquired assets at the end of Year One? c. What is the appropriate handling of any goodwill resulting from this transaction?
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