A2-1 Explanation - A2-1 Problem#1 Explanation P company purchases the following assets and takes on the following liability by issuing stock worth

A2-1 Explanation - A2-1 Problem#1 Explanation P company...

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A2-1 Problem #1 Explanation P company purchases the following assets and takes on the following liability by issuing stock worth $2,700 (= $9.00 per share * 300 shares): Item Estimated Fair Value Equipment 600 Building 1,800 Intangibles 750 Notes Payable (650) 2,500 Since P paid $2,700 and we can only identify an estimated $2,500 in fair value, we need to distribute the extra $200 among the identified assets. In this case, we will generally exclude currents assets and liabilities, financial assets and liabilities, and certain indefinite lived intangible assets from the markup. Theoretically this is because a markup of these items would normally require a corresponding immediate writedown. Since the Notes Payable are a financial
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