On July 1, 2011, Vera Corporation purchased IanSon Company by paying $187,500 cash and issuing a $75,000 note payable to IanSon . At July 1, 2011, the balance sheet of IanSon Company was as follows.
Cash $ 37,500 Accounts payable $150,000
Receivables 67,500 Stockholders' equity 176,250
Inventory 75,000 $326,250
Land 30,000
Buildings (net) 56,250
Equipment (net) 52,500
Trademarks 7,500
$326,250
The recorded amounts all approximate current values except for land (worth $45,000), inventory (worth $93,750), and trademarks (worth $11,250).
Instructions:
(a) Prepare the July 1 entry for Vera Corporation to record the purchase.
(b) Prepare the December 31 entry for Vera Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $2,250.