In a pre-2009 business combination, Acme Company acquired all of Brem Company's assets and liabilities for cash. After the combination, Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Items Current assets Book Values $ 88,400 131,000 Equipment Trademark Liabilities Common stock Retained earnings In addition, Acme paid an investment bank $29,200 cash for assistance in arranging the combination. 8 Fair Values $ 88,400 198,000 352,000 (74,400) (74,400) (100,000) (45,000) Required: a. Using the legacy purchase method for pre-2009 business combinations, prepare Acme's entry to record its acquisition of Brem in its accounting records assuming the cash amounts of $668,400 and $457,400 were paid to the former owners of Brem. b. How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method? Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.

In a pre-2009 business combination, Acme Company acquired all of Brem Company's assets and liabilities for cash. After the combination, Acme formally dissolved Brem. At the acquisition date, the following book and fair values were available for the Brem Company accounts: Items Current assets Book Values $ 88,400 131,000 Equipment Trademark Liabilities Common stock Retained earnings In addition, Acme paid an investment bank $29,200 cash for assistance in arranging the combination. 8 Fair Values $ 88,400 198,000 352,000 (74,400) (74,400) (100,000) (45,000) Required: a. Using the legacy purchase method for pre-2009 business combinations, prepare Acme's entry to record its acquisition of Brem in its accounting records assuming the cash amounts of $668,400 and $457,400 were paid to the former owners of Brem. b. How would these journal entries change if the acquisition occurred post-2009 and therefore Acme applied the acquisition method? Note: If no entry is required for a transaction/event, select "No Journal entry required" In the first account field.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 55RSCQ

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