Poplar Corp Fair Values on the Date of Acquisition If Poplar Paid $300,000 What Journal Entries Would Be Recorded

question 15

Essay

Poplar Corp. acquires the net assets of Sapling Company, which has the following balance sheet:
$\begin{array}{lr}\text { Accounts Receivable } & \$ 50,000 \\\text { Inventory } & 80,000 \\\text { Equipment, Net } & 50,000 \\\text { Land \& Building, Net } & 120,000 \\\text { Total Assets } & \$ 300,000\\\\\text { Bonds Payable } & \$ 90,000 \\\text { Common Stock } & 100,000 \\\text { Retained Eamings } & 110,000 \\\text { Total Liabilities and Stockhol ders' Equity } & \$ 300,000\end{array}$ Fair values on the date of acquisition:
$\begin{array}{lr}\text { Accounts Receivable } & \$ 50,000 \\\text { Inventory } & 100,000 \\\text { Equipment } & 30,000 \\\text { Land \& Building } & 180,000 \\\text { Customer List } & 30,000 \\\text { Bonds Payable } & 100,000 \\\text { Acqui sition costs: } & \$ 10,000\end{array}$ If Poplar paid $300,000 what journal entries would be recorded by both Poplar Corp. and Sapling Company?

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Definitions:

Automated Equipment

Machinery and tools that operate independently or with minimal human intervention, often used to improve efficiency in manufacturing processes.

Financially Attractive

Describes investments, projects, or opportunities that are expected to provide a high return relative to their cost.

Annual Cash Inflow

The total amount of money received by a business or project within a year from all sources.

Equipment

Tools or machinery used for specific tasks, particularly in industries and manufacturing.