Acc407 Advanced Accounting: P2-14 The following book and fair values were available for Westmont

Acc407 Advanced Accounting

P2-14
The following book and fair values were available for Westmont Company as of March 1.
Book Value Fair Value
Inventory 630,000 600,000
Land 750,000 990,000
Buildings 1,700,000 2,000,000
Customer relationships - 800,000
Accounts Payable (80,000) (80,000)
Common stock (2,000,000)
Additional paid-in capital (500,000)
Retained earnings 1/1 (360,000)
Revenues (420,000)
Expenses 280,000

Arturo Company pays $4,000,000 cash and issues 20,000 shares of its $2 par value common stock (fair value of $50 per share) for all of Westmont's common stock in a merger, after which Westmont will cease to exist as a separate entity. Stock issue costs amount to $25,000 and Arturo pays $42,000 for legal fees to compete the transaction.

Prepare Arturo's journal entry to record its acquisition of Westmont.
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