The Harlow Company purchased the Hampton Company for $600,000 cash. The fair market value of Hampton's assets was $520,000, and the company had liabilities of $30,000. Which of the following choices would reflect the purchase on Harlow's financial statements?

Question

Quizplus · Accepted Answer

The purchase is recorded as a debit (increase) to "Hampton Assets" for $520,000, the assets' market value, a credit (decrease) to cash for $600,000, and a debit (increase) to goodwill for the difference.

The Harlow Company Purchased the Hampton Company for $600,000 Cash