On July 1, 2014, Brigham Corporation purchased Young Company by paying $250,000 cash and issuing a $100,000 note payable to Steve Young. At July 1, 20
On July 1, 2014, Brigham Corporation purchased Young Company by paying $250,000 cash and issuing a $100,000 note payable to Steve Young. At July 1, 2014, the balance sheet of Young Company was as follows. Cash $ 50,000 Accounts payable $200,000
\r\nAccounts receivable 90,000 Stockholders’ equity 235,000 Inventory 100,000 $435,000
\r\nLand 40,000
\r\nBuildings (net) 75,000
\r\nEquipment (net) 70,000
\r\nTrademarks 10,000
\r\n$435,000
\r\nThe recorded amounts all approximate current values except for land (fair value of $60,000), inventory (fair value of $125,000), and trademarks (fair value of $15,000).
\r\nInstructions
\r\n(a) Prepare the July 1 entry for Brigham Corporation to record the purchase.
\r\n(b) Prepare the December 31 entry for Brigham Corporation to record amortization of intangibles. The trademark has an estimated useful life of 4 years with a residual value of $3,000.