Finance and Accounting, Coursework

Finance and Accounting, Coursework

Paul, Inc. acquired 100% of Ernie’s Inc. net assets on January 1, 2009 for $300,000 in cash and paid 10,000 for acquisition cost. The following facts relate to the acquisitions:

Accounts Receivable
50,000

Inventory
80,000

Equipment, Net
50,000

Land and Building, Net
120,000

Total Assets
$300,000
Bonds Payable
90,000

Common stock
100,000

Retained earnings
110,000

Total Liabilities and Stockholders’ Equity
$300,000

 
Fair value of acquired net assets:

Accounts receivable
$50,000

Inventory
100,000

Equipment
30,000

Land and building
180,000

Customer list
30,000

Bonds payable
100,000

 

Determine and provide the proper accounting entry to record the subsidiary on Paul’s books on January 1, 2009 as if Ernie was dissolved.
Determine and provide the proper accounting entry to record the subsidiary on Ernie’s books on January 1, 2009 as if Ernie was dissolved.
While acquisitions are often friendly, there are numerous occasions when a party does not want to be acquired. Discuss possible defensive strategies that firms can implement to fend off a hostile takeover attempt.
Please submit your assignment.

 

Grading Criteria
Students should complete the following items for this assignment:

Record the entry for investment in Paul’s books 33%
Record the entry for investment in Ernie’s books 33%
Explain possible defensive strategies that firms can implement to fend off a hostile takeover attempt 34%

 

 

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