Telecom Inc Has Decided to Purchase the Shares of Intron

question 55

Essay

Telecom Inc has decided to purchase the shares of Intron Inc. for $300, 000 in Cash on July 1,2012. On the date, the balance sheets of each of these companies were as follows: On that date, the fair values of Intron's Assets and Liabilities were as follows: Based on the information provided, answer the following: a) Prepare the journal entry to record the purchases Intron's shares. b) Prepare the required journal entry prior to the preparation of the Consolidated Financial Statements.

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Definitions:

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Market Interest Rate

The prevailing rate at which borrowers are willing to borrow money and lenders are willing to lend money in the free market.

Money Demand Curve

A graph that shows the relationship between the quantity of money demanded and the interest rate.

Money Demand

The desire or need to hold money as opposed to investing it, influenced by interest rates and economic activity.