Question

Saved Problem 2-26 (Algo) (LO 2-5, 2-6, 2-6b, 2-8) On May 1 Soriano Co reported the following account balances along with their estimated fair values: Receivables Inventory Patented technology Total arreta Current liabilities Lont-tem lisbilities Common stock Retained earnings Total Tislities and equities Carrying out 144.100 97. 400 115.500 300,000 1.5, 000 $ 235.000 06.000 100,000 237,000 $ 1.250.000 Fair Valge 144.100 77,400 500, 500 744.000 3 1.495.000 3 25.000 671,300 On that day, Zambrano paid cash to acquire all of the assets and liabilities of Soriano which will cease to exist as a separate entity To facilitate the merger, Zambrano also paid $133,500 to an investment banking firm The following information was also available: • Zambrano further agreed to pay an extra $87.600 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $43,800. Soriano has a research and development project in process with an appraised value of $236.000 However, the project has not yet reached technological feasibility and the project's assets have no alternative future use a&b. Prepare Zambrano's journal entries to record the Soriano acquisition assuring its total cash payment to the former owners was (a) $745,000 & (b) $848.700. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1)
Account Titles and Explanation	Debit	Credit
Acquisitions date fair values:
Receivables	$ 144,100.00
Inventory	$   77,400.00
Copyrights	$ 509,500.00
Patented Technology	$ 744,000.00
Research and Devlopment Assets	$ 236,000.00
Current liabilities		$       235,000.00
Long-term liabilities		$       671,000.00
Cash		$       745,000.00
Contingent performance obligation		$         43,800.00
Gain on Bargain Purchases		$         16,200.00
Profession Service expenses	$ 133,500.00
Cash		$       133,500.00
Cash Paid	745000
Contingent performance Liability	43800
Consideration Transferred	788800
Fair Values of Net Assets Acquired (1475000 - 235000-671000 + 236000	805000
Gain on Bargain Purchases	16200
2)
Account Titles and Explanation	Debit	Credit
Acquisitions date fair values:
Receivables	$ 144,100.00
Inventory	$   77,400.00
Copyrights	$ 509,500.00
Patented Technology	$ 744,000.00
Research and Devlopment Assets	$ 236,000.00
Goodwill	$   87,500.00
Current liabilities		$       235,000.00
Long-term liabilities		$       671,000.00
Cash		$       848,700.00
Contingent performance obligation		$         43,800.00
Profession Service expenses	$ 133,500.00
Cash		$       133,500.00
Cash Paid	$ 848,700.00
Contingent performance Liability	$   43,800.00
Consideration Transferred	$ 892,500.00
Fair Values of Net Assets Acquired (1475000 - 235000-671000 + 236000	$ 805,000.00
Goodwill	$   87,500.00