Allerton Company acquires all Deluxe Company’s assets and liabilities for cash on January 1, 2011, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe Company accounts:
| Book Values | Fair Values |
Current assets | $ 60,000 | $ 60,000 |
Building | 90,000 | 50,000 |
Land | 10,000 | 20,000 |
Trademark | –0– | 30,000 |
Goodwill | 15,000 | ? |
Liabilities | (40,000) | (40,000) |
Common stock | (100,000) |
|
Retained earnings | (35,000) |
|
Using the acquisition method, prepare Allerton’s entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts:
(1) $145,000.
(2) $110,000.
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