On January 1, 16 Brown Inc Required:
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Record Brown's Purchase of Larson Company's Net Assets

question 43

Essay

On January 1, 16 Brown Inc.acquired Larson Company's net assets in exchange for Brown's common stock with a par value of $100,000 and a fair value of $800,000.Brown also paid $10,000 in direct acquisition costs and $15,000 in stock issuance costs.
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On this date, Larson's condensed account balances showed the following:
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$\begin{array}{lrr}& \text { Book Value } & \text { Fair Value } \\\text { Current Assets } & \$ 280,000 & \$ 370,000 \\\text { Plant and Equipment } & 440,000 & 480,000 \\\text { Accumul ated Depreciation } & (100,000) & \\\text { Intangibles - Patents } & 80,000 & 120,000 \\\text { Current Liabilities } & (140,000) & (140,000) \\\text { Long-Term Debt } & (100,000) & (110,000) \\\text { Common Stock } & (200,000) & \\\text { Other Paid-in Capital } & (120,000) & \\\text { Retained Earnings } & (140,000) &\end{array}$
Required:
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Record Brown's purchase of Larson Company's net assets.
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Compare and contrast the views of Keynesian and conservative economists on the crowding-out effect.

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Definitions:

Activity Variance

The discrepancy observed between a business's estimated activities costs or resources and the actual expenses or usage.

Net Operating Income

Represents the total profit of a business after operating expenses are subtracted from gross profit.

Personnel Expenses

Costs associated with the compensation and benefits of a company's employees, including wages, salaries, bonuses, and benefits.

Planning Budget

A budget created for a specific level of activity that is used for planning and coordinating operations.