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Sheetz Company is purchased by Pulsar Corporation, at an acquisition cost that is $25,000,000 greater than...

Sheetz Company is purchased by Pulsar Corporation, at an acquisition cost that is $25,000,000 greater than the fair value of the identifiable net assets acquired. One of the assets acquired is a building, originally valued at $15,000,000 at the date of the purchase. Six months after the acquisition, it is discovered that the building was actually worth $7,000,000 at the date of acquisition. What entry is made to reflect this new information? Question 20 options: a) Dr. goodwill; Cr. building for $8,000,000 b) Dr. loss on building; Cr. building for $8,000,000 c) Dr. retained earnings; Cr. building for $8,000,000 d) no entry is made

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Answer #1

answer is

Dr. good will ...................$8000000

Cr. building ..................................$800000

Explanation : This is a correction of the original acquisition entry, since it relates to facts in existence at the date of acquisition, and it is within the one year constraint

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