Mans Company Is About to Purchase the Net Assets of Eagle

question 9

Essay

Mans Company is about to purchase the net assets of Eagle Incorporated, which has the following balance sheet:
Assets
$\begin{array}{lr}\text { Accounts receivable } && \$ 60,000 \\\text { Inventory } && 100,000\\\text { Equipment } & \$ 90,000 \\\text { Accumulated depreciation } & (50,000)&40,000\\\text { Land and buildings } & \$ 300,000 \\\text { Accumulated depreciation } & (100,000)&200,000\\\text { Goodwill }&&60,000\\\text { Total assets }&\$460,000\end{array}$

Liabilities and Stockholders' Equity
$\begin{array}{lr}\text { Bonds payable } & \$ 80,000 \\\text { Common stock, } \$ 10 \text { par } & 200,000 \\\text { Paid-in capital in excess of par } & 100,000 \\\text { Retained earnings } & 80,000\\\text { Total liabilities and equity }&\$460,000\end{array}$ Mans has secured the following fair values of Eagle's accounts:
$\begin{array}{lr}\text { Inventory } & \$ 130,000 \\\text { Equipment } & 60,000 \\\text { Land and buildings } & 260,000 \\\text { Bonds payable } & 60,000\end{array}$ Acquisition costs were $20,000.
Required:
Record the entry for the purchase of the net assets of Eagle by Mans at the following cash prices:
a.
$450,000
b.
$310,000
c.
$480,000

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Definitions:

Connectionist Theory

A cognitive science theory proposing that mental phenomena can be explained by interconnected networks of simple units resembling neural networks.

Gestalt Psychology

A psychological theory that emphasizes understanding the whole experience rather than breaking it down into individual components.

Direct Perception

The theory that suggests sensory information is inherently meaningful and that objects in the environment afford opportunities for action without the need for cognitive processing.

Affordances

The opportunities or possibilities for action provided by objects and environments to an organism.