Mans Company Is About to Purchase the Net Assets of Eagle

question 29

Essay

Mans Company is about to purchase the net assets of Eagle Inc., which has the following balance sheet:
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Mans has secured the following fair values of Eagle's accounts:
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$$\begin{array} { l r } \text { Inventory } & \$ 130,000 \\\text { Equipment } & 60,000 \\\text { Land and buildings } & 260,000 \\\text { Bonds payable } & 60,000\end{array}$$ Acquisition costs were $20,000.
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Required:
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Record the entry for the purchase of the net assets of Eagle by Mans at the following cash prices:
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a.$450,000
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b.$310,000
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c.$480,000
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Definitions:

Profit Center

A responsibility center that incurs costs and also generates revenues.

Average Operating Assets

The average value of the assets used in the normal operations of a business over a certain period, often used in evaluating the performance of investment centers.

Controllable Margin

A financial metric used to assess the amount of profit that can be controlled or influenced by managerial decisions.

Cost Center

A responsibility center that incurs costs but does not directly generate revenues.