Saveed Corporation Purchased the Net Assets of Penny Inc

question 5

Essay

Saveed Corporation purchased the net assets of Penny Inc.on January 2,2013 for $1,690,000 cash and also paid $15,000 in direct acquisition costs.Penny dissolved as of the date of the acquisition.Penny's balance sheet on January 2,2013 was as follows:
Fair values agree with book values except for inventory,land,and equipment,which have fair values of $640,000,$140,000 and $230,000,respectively.Penny has customer contracts valued at $20,000.
Required:
Prepare Saveed's general journal entry for the cash purchase of Penny's net assets.

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Definitions:

Hair Dryers

Electrical devices used to blow dry hair by emitting warm air.

Economies of Scope

Cost advantages that arise from a firm or company expanding its product line or markets, exploiting shared resources or technologies.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, leading to a decrease in the cost per unit as output increases.

Outputs

The goods or services produced by a business or an economy.