Hoover Company acquired Burgess Company for $1,200,000 cash.The fair value of Burgess's assets was $1,040,000,and the company had liabilities of $60,000.Which of the following journal entries would be used to record the purchase of Burgess Company?

Question

Quizplus · Accepted Answer

The acquisition is recorded as a debit (increase)to "Burgess Assets" for $1,040,000,which is the fair value of the assets acquired,a credit (decrease)to cash for the amount paid of $1,200,000,a credit (increase)to "Burgess Liabilities" for $60,000,and a debit (increase)to goodwill for the difference of $220,000.

Hoover Company Acquired Burgess Company for $1,200,000 Cash