Bigga Corporation purchased the net assets of Petit,Inc.on January 2,2011 for $380,000 cash and also paid $15,000 in direct acquisition costs.Petit,Inc.was dissolved on the date of the acquisition.Petit's balance sheet on January 2,2011 was as follows:
Fair values agree with book values except for inventory,land,and equipment,which have fair values of $260,000,$35,000 and $35,000,respectively.Petit has patent rights with a fair value of $20,000.
Required:
Prepare Bigga's general journal entry for the cash purchase of Petit's net assets.
Definitions:
Money
Money is a medium of exchange in the form of coins and banknotes; by which goods and services are valued and exchanged.
Present Value
The current financial value of money or cash flows that will be obtained in the future, factored by a particular rate of return.
Annuity
An economic device offering a steady series of disbursements to someone, commonly utilized as a financial support for retired individuals.
Market Rate
The prevailing rate at which a particular good, service, or asset is bought and sold in a free market.
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