Keen Inc and Lax Inc Had the Following Balance Sheets

question 5

Essay

Keen Inc and Lax Inc had the following balance sheets on October 31, 2019:
$\begin{array}{|l|r|r|r|}\hline & \text { Keen Inc } & \text { Lax Inc } & \text { Lax Inc } \\\hline & \text { (carrying value) } & \text { (carrying value) } & \text { (fair value) } \\\hline \text { Cash } & \$ 300,000 & \$ 80,000 & \$ 80,000 \\\hline \text { Accounts Receivable } & \$ 60,000 & \$ 24,000 & \$ 24,000 \\\hline \text { Inventory } & \$ 30,000 & \$ 54,000 & \$ 50,000 \\\hline \text { Plant and Equipment (net) } & \$ 310,000 & \$ 280,000 & \$ 300,000 \\\hline \text { Trademark } & & \$ 12,000 & \$ 16,000 \\\hline \text { Total Assets } & \$ 700,000 & \$ 450,000 \\\hline \text { Accounts Payable } & \$ 150,000 & \$ 200,000 &\$200,000\\\hline \text { Bonds Payable } & \$ 400,000 & \$ 120,000&\$100,000 \\\hline \text { Common Shares } & \$ 100,000 & \$ 60,000 \\\hline \text { Retained Earnings } & \$ 50,000 & \$ 70,000 \\\hline \text { Total Liabilities and Equity } & \$ 700,000 & \$ 450,000 \\\hline\end{array}$ Assuming that Keen Purchases 100% of Lax for a consideration of $100,000 on September 1, 2019, and accounts for its investment using the cost method, prepare (under the Fair Value Enterprise Method):
a) the journal entry that Keen Inc. would make to record the acquisition;
b) the elimination entry necessary to produce consolidated balance sheet on the acquisition date.

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Definitions:

Housing

Refers to the provision and availability of homes and buildings for habitation by individuals and families.

Utility

A measure of satisfaction or happiness that a consumer derives from the consumption of goods and services.

Consumption Bundle

A mix of products and services selected by a consumer for use at a specific moment.

Price

The budgeted amount foreseen, called for, or remitted as remuneration for something.