Question - On July 1, 2017, Cheyenne Corporation purchased Young Company by paying $257,000 cash and issuing a $127,000 note payable to Steve Young. At July 1, 2017, the balance sheet of Young Company was as follows.
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Cash
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$51,400
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Accounts payable
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$204,000
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Accounts receivable
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91,100
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Stockholders' equity
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242,100
|
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Inventory
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105,000
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$446,100
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Land
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41,600
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|
|
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Buildings (net)
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74,900
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|
|
|
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Equipment (net)
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70,700
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|
|
|
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Trademarks
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11,400
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|
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$446,100
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|
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The recorded amounts all approximate current values except for land (fair value of $60,400), inventory (fair value of $126,100), and trademarks (fair value of $16,160).
Prepare the July 1 entry for Cheyenne Corporation to record the purchase.
Prepare the December 31 entry for Cheyenne Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,360.