Parrot Incorporated Purchased the Assets and Liabilities of Sparrow Company

question 2

Essay

Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31, 2011.Parrot borrowed $2,000,000 to complete this transaction, in addition to the $640,000 cash that they paid directly.The fair value and book value of Sparrow's recorded assets and liabilities as of the date of acquisition are listed below.In addition, Sparrow had a patent that had a fair value of $50,000.
Required:
1.Prepare Parrot's general journal entry for the acquisition of Sparrow, assuming that Sparrow survives as a separate legal entity.
2.Prepare Parrot's general journal entry for the acquisition of Sparrow, assuming that Sparrow will dissolve as a separate legal entity.

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Definitions:

Weathering

The natural process where rocks are broken down or dissolved into smaller pieces by chemical, physical, or biological factors.

Clay Minerals

A group of hydrated silicates of aluminum, sometimes with iron, magnesium, or other cations, which possess fine-grained structures and are a major component of soils.

Plant Cover

The layer of vegetation or plants that covers the ground in a specific area, crucial for maintaining ecosystems and influencing water and soil quality.

Erosion

Erosion is the process by which natural forces like water, wind, ice, and gravity wear away rocks and soil, transporting them from one place to another.