Darnell Company Purchased $88,000 of Computer Equipment from Joseph Company

question 189

Essay

Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using cash that had been obtained from the initial investment by Donnie Darnell.
Which entity or entities (Darnell Company, Joseph Company, Donnie Darnell) should record the transaction involving the computer equipment on their accounting records?

---

Definitions:

Gain on Acquisition

The positive difference between the value acquired and the purchase price paid in a business combination.

Loss on Acquisition

Financial loss recognized when the cost of acquiring a company exceeds the sum of the fair value of its identifiable net assets at the acquisition date.

Voting Shares

Shares that endow the holder with the right to vote on matters at shareholders' meetings and to elect the directors of the company.

Consolidated Balance Sheet

A financial statement that presents the assets, liabilities, and equity of a parent company and its subsidiaries as if the group was a single entity.