In 2018, Evan Company spent $3,900,000 to acquire 100% of the outstanding stock of Haven Company,...

90.2K

Verified Solution

Question

Accounting

In 2018, Evan Company spent $3,900,000 to acquire 100% of theoutstanding stock of Haven Company, i.e., Evan bought Haven. As aresult of the acquisition, Evan took over 100% of Haven’s assetsAND Even became responsible for 100% of Haven’s liabilities. At thetime of the purchase, Haven’s balance sheet reflected thefollowing:
Cash                                                                                                $ 300,000
Accounts receivable,net                                                             1,300,000
Investments                                                                                        900,000
Property, plant, and equipment,net                                          1,100,000
TOTALASSETS                                                                         $3,600,000
Accounts payable and accruedliabilities                                $   750,000
Bondspayable                                                                               1,250,000
Common stock, $1 parvalue                                                            60,000
Additionalpaid-in-capital                                                                800,000
Retainedearnings                                                                              740,000
TOTAL LIABILITIES &SE                                                     $3,600,000
At the time of the purchase, Evan identified the following:
The fair value of Haven’s assets equaled their book valueEXCEPT FOR the investments and the PP&E. The fair value of theinvestments was $1,200,000 while the fair value of the PP&E was$1,500,000.
The fair value of Haven’s liabilities equaled their book valueEXCEPT FOR the bonds payable. The fair value of the bonds payablewas $1,200,000.
Haven possessed an internally-developed customer list that Evanvalued at $60,000.
Haven possessed an internally-developed patent that Evan valuedat $300,000.
Prepare the entry Evan should make to reflect the purchase ofHaven.

Answer & Explanation Solved by verified expert

3.8 Ratings (554 Votes)

Evan Company acquires 100 stock of Haven Company Total purchase consideration 3900000 Evan Company acquires the following assets and liabilities Assets Cash 300000 Accounts Receivable 1300000 Investment 1200000 Property Plant Equipment 1500000 Patent Unrecorded Asset 300000 Customer list Unrecorded See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In 2018, Evan Company spent $3,900,000 to acquire 100% of theoutstanding stock of Haven Company, i.e., Evan bought Haven. As aresult of the acquisition, Evan took over 100% of Haven’s assetsAND Even became responsible for 100% of Haven’s liabilities. At thetime of the purchase, Haven’s balance sheet reflected thefollowing:Cash $ 300,000Accounts receivable,net 1,300,000Investments 900,000Property, plant, and equipment,net 1,100,000TOTALASSETS $3,600,000Accounts payable and accruedliabilities $ 750,000Bondspayable 1,250,000Common stock, $1 parvalue 60,000Additionalpaid-in-capital 800,000Retainedearnings 740,000TOTAL LIABILITIES &SE $3,600,000At the time of the purchase, Evan identified the following:The fair value of Haven’s assets equaled their book valueEXCEPT FOR the investments and the PP&E. The fair value of theinvestments was $1,200,000 while the fair value of the PP&E was$1,500,000.The fair value of Haven’s liabilities equaled their book valueEXCEPT FOR the bonds payable. The fair value of the bonds payablewas $1,200,000.Haven possessed an internally-developed customer list that Evanvalued at $60,000.Haven possessed an internally-developed patent that Evan valuedat $300,000.Prepare the entry Evan should make to reflect the purchase ofHaven.