Chapter 10 Acquisition and Disposition of Property Plant and

Chapter 10 Acquisition and Disposition of Property, Plant and Equipment

Boston Corporation purchased the following assets from Bradley Corporation for $1,300,000. An independent appraisal of the fair value of the assets acquired is listed below:

Land………........................ $214,500

Building…………………… 357,500

Equipment………………….572,000

Patent……………………….286,000

Prepare the journal entry to record the purchase of the assets.

Solution

Intangible Assets to be written off and in this case Patent is the intangible asset which will be written off

Land $214,500 + Building $357,500 + Equipment $572,000= $1,144,000 should be debited

Cash Paid should be credited $1,300,000

Difference i.e. $156,000 is Goodwill should be debited

Debit Land $214,500

Debit Building $357,000

Debit Equipment $572,000

Debit Goodwill (Balancing figure ) $156,000

Credit Cash $1300,000