Saveed Corporation purchased the net assets of Penny Inc.on January 2, 2011 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, 2011 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.
Definitions:
Noncash Assets
Assets that are not in the form of cash or cannot be easily converted into cash, such as property, plant, and equipment.
Liquidation Process
The procedure of closing a business and distributing its assets to claimants, often preceding dissolution.
Proposed Schedule
A preliminary plan that outlines future activities or events, awaiting approval or finalization.
Account Balances
The amount of money in a financial account, calculated by subtracting debits from credits in the account.
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