Determine the amount fortune corporation

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Bargain Purchase

Using the data presented in E1-13, determine the amount Fortune Corporation would record as a gain on bargain purchase and prepare the journal entry Fortune would record at the time of the exchange if Fortune issued bonds with a par value of $580,000 and a fair value of $564,000 in completing the acquisition of Sorden.

E1-13:

Balance Sheet Item

Historical Cost

Fair Value

Cash & Receivables

$ 55,000

$ 50,000

Inventory

105,000

200,000

Land

60,000

100,000

Plant & Equipment

400,000

300,000

Less: Accumulated Depreciation

(150,000)


Goodwill

10,000


Total Assets

$480,000

$650,000

Accounts Payable

$ 50,000

$ 50,000

Common Stock

100,000


Additional Paid-In Capital

60,000


Retained Earnings

270,000


Total Liabilities & Equities

$480,000

Reference no: EM131099591

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