Acc407 Advanced Accounting: P2-21 Allerton Company acquires all Deluxe Company's assets

Acc407 Advanced Accounting

Problem 2-21
Allerton Company acquires all Deluxe Company's assets and liabilities for cash on January 1, 2011, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair values were available for the Deluxe company accounts:
Book Values Fair Values
Current Assets 60,000 60,000
Building 90,000 50,000
Land 10,000 20,000
Trademark - 30,000
Goodwill 15,000 ?
Liabilities (40,000) (40,000)
Common Stock (100,000)
Retained Earnings (35,000)

Using the acquisition method, prepare Allerton's entry to record its acquisition of Deluxe in its accounting records assuming the following cash exchange amounts:
1. $145,000
2. $110,000
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