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RGW Industries Purchased the Net Assets of SP Company for $1,300,000

question 14

Essay

RGW Industries purchased the net assets of SP Company for $1,300,000, comprised of $1,200,000 of cash and a contingent performance condition of $100,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows:
$\begin{array}{ll}\text { Assets } & \\\text { Cash } & \$ 31,000 \\\text { Receivables } & 250,000 \\\text { Inventory } & 302,000 \\\text { Land, buildings, and equipment(net) } & \mathbf{3 5 0 , 0 0 0} \\\text { Total assets } & \$ 933,000\end{array}$
$RGW Industries purchased the net assets of SP Company for $1,300,000, comprised of $1,200,000 of cash and a contingent performance condition of $100,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows: \begin{array}{ll} \text { Assets } & \\ \text { Cash } & \$ 31,000 \\ \text { Receivables } & 250,000 \\ \text { Inventory } & 302,000 \\ \text { Land, buildings, and equipment(net) } & \mathbf{3 5 0 , 0 0 0} \\ \text { Total assets } & \$ 933,000 \end{array} The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition: Prepare the journal entry to record this acquisition using the acquisition method prescribed by SFAS 141R,, Business Combinations.$
The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition:
$RGW Industries purchased the net assets of SP Company for $1,300,000, comprised of $1,200,000 of cash and a contingent performance condition of $100,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows: \begin{array}{ll} \text { Assets } & \\ \text { Cash } & \$ 31,000 \\ \text { Receivables } & 250,000 \\ \text { Inventory } & 302,000 \\ \text { Land, buildings, and equipment(net) } & \mathbf{3 5 0 , 0 0 0} \\ \text { Total assets } & \$ 933,000 \end{array} The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition: Prepare the journal entry to record this acquisition using the acquisition method prescribed by SFAS 141R,, Business Combinations.$
Prepare the journal entry to record this acquisition using the acquisition method prescribed by SFAS 141R,, "Business Combinations."

Definitions:

Functional Lines

Functional lines refer to the various departments or units within an organization, each with specific responsibilities and roles.

Functional Expertise

Refers to the specific knowledge and skills that enable an individual to excel in a particular job or industry.

Economies of Scale

Cost advantages that a business obtains due to expansion, where the average cost per unit of output decreases with the increase in scale of production.

Functional Organizations

A type of organizational structure that groups employees based on their specialized roles or functions.