Diamond Acquired Heart's Net Assets Fair Values on the Date of Acquisition

question 27

Essay

Diamond acquired Heart's net assets. At the time of the acquisition Heart's Balance sheet was as follows:
$\begin{array}{lr}\text { Accounts Receivable } & \$ 130,000 \\\text { Inventory } & 70,000 \\\text { Equipment, Net } & 50,000 \\\text { Building, Net } & 250,000 \\\text { Land \& Building, Net } & 100,000 \\\text { Total Assets } & \$ 600,000 \\& \\\text { Bonds Payable } & \$ 100,000 \\\text { Common Stock } & 50,000 \\\text { Retained Earnings } & 450,000 \\\text { Total Liabilities and Stockholders' Equity } & \$ 600,000\end{array}$ Fair values on the date of acquisition:
$\begin{array}{lr}\text { Inventory } & \$ 100,000 \\\text { Equipment } & 30,000 \\\text { Building } & 350,000 \\\text { Land } & 120,000 \\\text { Brand name copyright } & 50,000 \\\text { Bonds payable } & 120,000 \\\text { Acqui sition costs: } & \$ 5,000\end{array}$ Required:
Record the entry for the purchase of the net assets of Heart by Diamond at the following cash prices:
a.
$700,000
b.
$300,000

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Definitions:

Scratches

Marks or superficial injuries caused by something sharp or abrasive, affecting surfaces or skins.

Desk Pieces

Items or accessories placed on a desk for functional or decorative purposes, often used in professional settings.

Intermediaries

Agents or businesses that act as a middleman in the distribution process or transactions between producers and consumers.

Agents

An intermediary who brings buyers and sellers together and facilitates the exchange.