Carrying Amount Fair Value Receivables $ 189,500 $ 189,500

| March 29, 2017


Amount Fair Value
Receivables $ 189,500 $ 189,500
Inventory 90,000 90,000
Copyrights 154,500 526,500
Patented technology 854,000 675,000
Total assets $ 1,288,000 $ 1,481,000
Current liabilities $ 207,000 $ 207,000
Long-term liabilities 686,000 667,200
Common stock 100,000
Retained earnings 295,000
Total liabilities and equities $ 1,288,000
On May 1, 2014, Zambrano paid cash to acquire all of the assets and liabilities of Soriano, which will cease to exist as a separate entity. To facilitate the merger, Zambrano also paid $114,500 to an investment banking firm on May 1.

On June 1, 2014, obtained possession of the assets and liabilities of Soriano Company and recorded these assets and liabilities on their accounting records.
The following information was also available:

Zambrano further agreed to pay an extra $80,200 to the former owners of Soriano only if they meet certain revenue goals during the next two years. Zambrano estimated the present value of its probability adjusted expected payment for this contingency at $40,100.

Soriano has a research and development project in process with an appraised value of $216,000. However, the project has not yet reached technological feasibility and the project’s assets have no alternative future use.

Prepare Zambrano’s journal entries to record the Soriano acquisition assuming its initial cash payment to the former owners was as follows: (If no entry is required for a transaction, select “No journal entry required” in the first account field.)


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