Zone analysis, alternative prices. Browne Corporation agreed to purchase the net assets of White Corporation on January 1, 20X1. White had the following balance sheet on the date of acquisition:
|
White Corporation |
|||
|
Assets |
Liabilities and Equity |
||
|
Accounts receivable |
$79,000 |
Current liabilities |
$145,000 |
|
Inventory |
112,000 |
Bonds payable |
100,000 |
|
Other current assets |
55,000 |
Common stock |
200,000 |
|
Equipment (net) |
294,000 |
Paid in capital in excess of par |
50,000 |
|
Trademark |
30,000 |
Retained earnings |
75,000 |
|
Total assets |
$570,000 |
Total liabilities and equity |
$570,000 |
An appraiser determines that In Process R&D exists and has an estimated value of $14,000. The appraisal indicates that the following assets had fair values that differed from their book values:
|
Fair Value |
|
|
Inventory |
$120,000 |
|
Equipment |
307,000 |
|
Trademark |
27,000 |
Required
Use zone analysis to prepare the entry on the books of Browne Corporation to purchase the net assets of White Corporation under each of the following purchase price scenarios:
a. $500,000
b. $250,000
c. $5,000