When Campbell Soup purchased the European culinary business from Unilever, the acquisition was funded with available cash and a short-term notes payable. The $920 million purchase price was allocated: $100 million to fixed assets and inventory; $490 million to identifiable intangible assets (e.g., trademarks), and $330 representing the excess of the purchase price over the fair value of the individual assets acquired (goodwill).
REQUIRED:
a. How did the transaction affect the accounting equation from Campbell Soup's perspective?
b. How did the transaction affect the accounting equation from Unilever's perspective?
c. Describe how the transaction affected Campbell Soup's balance sheet.
d. Prepare the journal entry made by Campbell Soup to record the transaction.