Internet Corporation is considering the acquisition of Homepage Corporation and has obtained the following audited condensed balance sheet:
Internet also acquired the following fair values for Homepage's assets and liabilities:
$\begin{array}{lr}
\text { Current assets } & \$ 55,000 \
\text { Land } & 60,000 \
\text { Buildings (net) } & 90,000 \
\text { Equipment (net) } & 75,000 \
\text { Current Liabilities } & (60,000) \
& \$ 220,000
\end{array}$ Internet and Homepage agree on a price of $280,000 for Homepage's net assets. Prepare the necessary journal entry to record the purchase given the following scenarios:
a.
Internet pays cash for Homepage Corporation and incurs $5,000 of acquisition costs.
b.
Internet issues its $5 par value stock as consideration. The fair value of the stock at the acquisition date is $50 per share. Additionally, Internet incurs $5,000 of security issuance costs.

Question

Internet Corporation is considering the acquisition of Homepage Corporation and has obtained the following audited condensed balance sheet:
  Internet also acquired the following fair values for Homepage's assets and liabilities:
 $\begin{array}{lr}
\text { Current assets } & \$ 55,000 \
\text { Land } & 60,000 \
\text { Buildings (net) } & 90,000 \
\text { Equipment (net) } & 75,000 \
\text { Current Liabilities } & (60,000) \
& \$ 220,000
\end{array}$ Internet and Homepage agree on a price of $280,000 for Homepage's net assets. Prepare the necessary journal entry to record the purchase given the following scenarios: 
a.
Internet pays cash for Homepage Corporation and incurs $5,000 of acquisition costs.
b.
Internet issues its $5 par value stock as consideration. The fair value of the stock at the acquisition date is $50 per share. Additionally, Internet incurs $5,000 of security issuance costs.

Quizplus · Accepted Answer

The Answer of Internet Corporation is considering the acquisition of Homepage Corporation and has obtained the following audited condensed balance sheet:
  Internet also acquired the following fair values for Homepage's assets and liabilities:
 $\begin{array}{lr}
\text { Current assets } & \$ 55,000 \
\text { Land } & 60,000 \
\text { Buildings (net) } & 90,000 \
\text { Equipment (net) } & 75,000 \
\text { Current Liabilities } & (60,000) \
& \$ 220,000
\end{array}$ Internet and Homepage agree on a price of $280,000 for Homepage's net assets. Prepare the necessary journal entry to record the purchase given the following scenarios: 
a.
Internet pays cash for Homepage Corporation and incurs $5,000 of acquisition costs.
b.
Internet issues its $5 par value stock as consideration. The fair value of the stock at the acquisition date is $50 per share. Additionally, Internet incurs $5,000 of security issuance costs.

Internet Corporation Is Considering the Acquisition of Homepage Corporation and Has