Internet Corporation Is Considering the Acquisition of Homepage Corporation and Has

Essay

Internet Corporation is considering the acquisition of Homepage Corporation and has obtained the following audited condensed balance sheet:
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Homepage Corporation
Balance Sheet
December 31, 2016 ?
$$\begin{array} { l r l r } & \text { Assets } & & { \text { Liabilities and Equity } } \\\text { Current assets } & \$ 40,000 & \text { Current Liabilities } & \$ 60,000 \\\text { Land } & 20,000 & \text { Capital Stock } ( 50,000 & \\\text { Buildings (net) } & 80,000 & \text { shares, } \$ 1 \text { par value) } & 50,000 \\\text { Equipment (net) } & \underline { 60,000 } & \text { Other Paid-in Capital } & 20,000 \\& & \text { Retained Earnings } & 70,000 \\& \$ 200,000 & & \$ 200,000 \end{array}$$ Internet also acquired the following fair values for Homepage's assets and liabilities:
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$$\begin{array} { l r } \text { Current assets } & \$ 55,000 \\\text { Land } & 60,000 \\\text { Buildings (net) } & 90,000 \\\text { Equipment (net) } & 75,000 \\\text { Current Liabilities } & ( 60,000 ) \\& \$ 220,000\end{array}$$ Internet and Homepage agree on a price of $280,000 for Homepage's net assets.Prepare the necessary journal entry to record the purchase given the following scenarios:
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a.Internet pays cash for Homepage Corporation and incurs $5,000 of acquisition costs.?
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b.Internet issues its $5 par value stock as consideration.The fair value of the stock at the acquisition date is $50 per share.Additionally, Internet incurs $5,000 of security issuance costs.?