In 2018, Evan Company spent $3,900,000 to acquire 100% of the outstanding stock of Haven Company, i.e., Evan bought Haven. As a result of the acquisition, Evan took over 100% of Haven’s assets AND Even became responsible for 100% of Haven’s liabilities. At the time of the purchase, Haven’s balance sheet reflected the following:

Cash $ 300,000

Accounts receivable, net 1,300,000

Investments 900,000

Property, plant, and equipment, net 1,100,000

TOTAL ASSETS $3,600,000

Accounts payable and accrued liabilities $ 750,000

Bonds payable 1,250,000

Common stock, $1 par value 60,000

Additional paid-in-capital 800,000

Retained earnings 740,000


At the time of the purchase, Evan identified the following:

a.The fair value of Haven’s assets equaled their book value EXCEPT FOR the investments and the PP&E.

The fair value of the investments was $1,200,000 while the fair value of the PP&E was $1,500,000.

b.The fair value of Haven’s liabilities equaled ther book value EXCEPT FOR the bonds payable. The fair value of the bonds payable was $1,200,000.

c.Haven possessed an internally-developed customer list that Evan valued at $60,000.

d.Haven possessed an internally-developed patent that Evan valued at $300,000.

Prepare the entry Evan should make to reflect the purchase of Haven.

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