On January 1, 2023, Palo Verde Corporation acquired 100 percent of the voting stock of...

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Accounting

On January 1, 2023, Palo Verde Corporation acquired 100 percent of the voting stock of Silverstone Corporation in exchange for $2,030,000 in cash and securities. On the acquisition date, Silverstone had the following balance sheet: Cash $ 23,000 Accounts payable $ 1,050,000 Accounts receivable 97,000 Inventory 140,000 Equipment (net) 1,490,000 Common stock 800,000 Trademarks 850,000 Retained earnings 750,000 Total assets $ 2,600,000 Total liabilities and equity $ 2,600,000 At the acquisition date, the book values of Silverstones assets and liabilities were generally equivalent to their fair values except for the following assets: Asset Book Value Fair Value Remaining Useful Life Equipment $ 1,490,000 $ 1,610,000 8 years Royalty agreements 0 160,00

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To analyze the acquisition of Silverstone Corporation by Palo Verde Corporation lets break down the key elements of the transaction and the adjustments needed for the fair value of the assets and liabilities Step 1 Understand the Acquisition Details Purchase Price 2030000 in cash and securities Acquired Company Silverstone Corporation Step 2 Review Silverstone Corporations Balance Sheet Assets Cash 23000 Accounts Receivable 97000 Inventory See Answer

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