(a) Journal Entry to record the purchase
(1) For takeover of Assets & Liabilities
Dr. Cash $50,000
Dr. Accounts Receivable $140,000
Dr. Inventory $120,000
Dr. Land $50,000
Dr. Building $75,000
Dr. Equipment $70,000
Dr. Trademark $20,000
Dr. Goodwill (Balancing fig) $75,000
Cr. Accounts Payable $200,000
Cr. Shareholders of Y Ltd $400,000
(2) For payment to Shareholders of y Ltd.
Dr. Shareholders of Y Ltd. $400,000
Cr. Cash $300,000
Cr. Notes Payable $100,000
(b) Journal Entry for amortization of Trademark
Dr. Amortization Expense $2,000
Cr. Trademark $2,000
Amount to be amortized = (Fair Value - Salvage Value) * 6 months / 4 years
= ($20,000 - $4,000) / 8
= $2,000
On July 1, 2017, S company purchased Y company by paying $300,000 cash and issuing a...
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