RGW Industries Purchased the Net Assets of SP Company for $1,300,000

Essay

RGW Industries purchased the net assets of SP Company for $1,300,000, comprised of $1,200,000 of cash and a contingent performance condition of $100,000. A schedule of the net assets of SP Company, as recorded on SP Company's books at the time of the acquisition, is as follows:
$\begin{array}{ll}\text { Assets } & \\\text { Cash } & \$ 31,000 \\\text { Receivables } & 250,000 \\\text { Inventory } & 302,000 \\\text { Land, buildings, and equipment(net) } & \mathbf{3 5 0 , 0 0 0} \\\text { Total assets } & \$ 933,000\end{array}$

The following schedule shows the differences between the recorded costs and market values of the assets of SP Company at the date of the acquisition:

Prepare the journal entry to record this acquisition using the acquisition method prescribed by SFAS 141R,, "Business Combinations."