Sugar Corp and Syrup Limited Have Reached an Agreement in Principle

question 17

Essay

Sugar Corp and Syrup Limited have reached an agreement in principle to combine their operations as of October 1,20X9.However,the Board of directors cannot decide on the best way to accomplish the combination.Below are the alternatives being considered:
1.Sugar acquires the net assets of Syrup for $1,700,000 cash.
2.Sugar acquires only the assets for $2,650,000 cash.
3.Sugar acquires all of the outstanding shares of Syrup by issuing shares with a fair market value of $1,700,000.
Syrup has the following assets and liabilities at October 1,20X9,(in thousands of dollars)

The only item that has a fair value different from its carrying value is the property,plant and equipment,which has a fair value of $1,900.
Required:
Explain how each transaction is different from the acquirer's point of view.Prepare the journal entry that would be recorded by Sugar for each these alternatives.

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Definitions:

Field Experiment

A study conducted in a real-world setting where the researcher manipulates one or more variables to observe the effect on a particular outcome.

Independent Variable

The factor in an experiment that is intentionally changed to observe its effect on the dependent variable.

Role Models

are individuals admired for their behaviors, qualities, or achievements, who serve as examples for others to emulate.

Behavior Modeling

A training method that involves showing learners how to perform a behavior by acting it out, often used in skill acquisition.