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Pritano Company acquired all the net assets of Succo Company on December 31 2010

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Pritano Company acquired all the net assets of Succo Company on December 31 2010;Asset Purchase, Contingent Consideration;Pritano Company acquired all the net assets of Succo Company on December 31, 2010, for $2,160,000 cash. The balance sheet of Succo Company immediately prior to the acquisition showed;Book value;Fair value;Current assets;$ 960,000;$ 960,000;Plant and equipment;1,080,000;1,440,000;Total;$2,040,000;$2,400,000;Liabilities;$ 180,000;$ 216,000;Common stock;480,000;Other contributed capital;600,000;Retained earnings;780,000;Total;$2,040,000;As part of the negotiations, Pritano agreed to pay the stockholders of Succo $360,000 cash if the postcombination earnings of Pritano averaged $2,160,000 or more per year over the next two years.;Required;Prepare the journal entries on the books of Pritano to record the acquisition on December 31, 2010. It is expected that the earnings target is likely to be met.

 

Paper#28756 | Written in 18-Jul-2015

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