Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31,2013.Parrot borrowed $2,000,000 to complete this transaction,in addition to the $640,000 cash that they paid directly.The fair value and book value of Sparrow's recorded assets and liabilities as of the date of acquisition are listed below.In addition,Sparrow had a patent that had a fair value of $50,000.
$Parrot Incorporated purchased the assets and liabilities of Sparrow Company at the close of business on December 31,2013.Parrot borrowed $2,000,000 to complete this transaction,in addition to the $640,000 cash that they paid directly.The fair value and book value of Sparrow's recorded assets and liabilities as of the date of acquisition are listed below.In addition,Sparrow had a patent that had a fair value of $50,000. \begin{array}{lll} \text { Accounts payable } & \$ 1,200,000 & \$ 1,200,000 \\ \text { Notes payable } & 2,100,000 & 2,100,000 \\ \text { Capital stock, } \$ 5 \text { par } & 700,000 & \\ \text { Additional paid-in capital } & 1,400,000 & \\ \text { Retained Earnings } & \underline{490,000} \\ \text { Total Liabilities \& Equities } & \$ 5,890,000 \end{array} Required: 1.Prepare Parrot's general journal entry for the acquisition of Sparrow,assuming that Sparrow survives as a separate legal entity. 2.Prepare Parrot's general journal entry for the acquisition of Sparrow,assuming that Sparrow will dissolve as a separate legal entity.$

\begin{array}{lll}\text { Accounts payable } & \$ 1,200,000 & \$ 1,200,000 \\\text { Notes payable } & 2,100,000 & 2,100,000 \\\text { Capital stock, } \$ 5 \text { par } & 700,000 & \\\text { Additional paid-in capital } & 1,400,000 & \\\text { Retained Earnings } & \underline{490,000} \\\text { Total Liabilities \& Equities } & \$ 5,890,000\end{array}

Required:
1.Prepare Parrot's general journal entry for the acquisition of Sparrow,assuming that Sparrow survives as a separate legal entity.
2.Prepare Parrot's general journal entry for the acquisition of Sparrow,assuming that Sparrow will dissolve as a separate legal entity.

Pony Acquired Spur Corporation's Assets and Liabilities for $500,000 Cash

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