A Company Needed a New Building

question 41

Essay

A company needed a new building.It found a suitable location with an existing old building on the land.The company reached an agreement to buy the land and the building for $960,000 cash.The old building was demolished to make way for the needed new building.Following is information regarding the demolition of the old building and construction of the new one: Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.

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Definitions:

Merger

The combination of two or more companies into a single entity, usually by one company acquiring the assets and businesses of the other.

Consolidation

The act of combining multiple entities, assets, or processes into a single, more effective and efficient unit.

Short-form Merger

A method of merger where a parent company merges with a subsidiary and doesn't require approval from the subsidiary's shareholders.

Parent Corporation

A company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors.