ParCorp is selling inventory and a building to an unrelated company SmaCorp for $90,000. The cost,...
ParCorp is selling inventory and a building to an unrelated company SmaCorp for $90,000. The cost, book value, and fair value of the building are $80,000, 60,000, and 100,000. The cost, book value, and fair value of the inventory are $10,000, 10,000, and 10,000. Provide SmaCorp's journal entry.
Homework Answers
Journal Entry in the books of SmaCorp:
| Account title and explanation | Debit | Credit |
| Inventory | $8,182 | |
| Building | $81,818 | |
| Cash | $90,000 | |
| [To record purchase of inventory and building] |
Calculations:
Purchase price of building and inventory is $90,000. It should be apportioned on the basis of Fair value. Threfore,
Cost of inventory = $90,000 x ($10,000/$110,000) = $8,182
Cost of building = $90,000 x ($100,000/$110,000) = $81,818
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ParCorp is selling inventory and a building to an unrelated
company SmaCorp for $90,000. The cost,...
ParCorp is selling inventory and a building to an unrelated company SmaCorp for $90,000. The cost,...
ParCorp is selling inventory and a building to an unrelated company SmaCorp for $90,000. The cost, book value, and fair value of the building are $80,000, 60,000, and 100,000. The cost, book value, and fair value of the inventory are $10,000, 10,000, and 10,000. Provide ParCorp's journal entry.
CVS is selling inventory and a building to an unrelated company Riteaid for $100,000. The cost,...
CVS is selling inventory and a building to an unrelated company Riteaid for $100,000. The cost, book value, and fair value of the building are $90,000, 70,000, and 110,000. The cost, book value, and fair value of the inventory are $20,000, 20,000, and 20,000. Provide CVS's journal entry. Using fair value method and equity method.
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