Problem 1 On January 1, Sylvestre Company reported the follo…
Problem 1 On January 1, Sylvestre Company reported the following accounting balances: Receivables $ 80,000 Current liabilities $ 10,000 Inventory 70,000 Long-term liabilities 50,000 Buildings (net) 75,000 Common stock 90,000 Equipment (net) 25,000 Retained earnings 100,000 Total assets $250,000 Total liabs. & SE $250,000 On January 1, Argo Company paid $300,000 cash for all the assets and liabilities of Sylvestre Company, which will cease operations after being acquired by Argo. In connection with the acquisition, Argo paid $10,000 in legal fees and agreed to pay $50,000 to the previous owners of Sylvestre contingent on the firm meeting certain net income goals in the following year. Argo estimated the present value of this probability adjusted expected payment for the contingency at $15,000. In determining its offer, Argo noted the following pertaining to Sylvestre: It holds a building with a fair value $40,000 more than its book value. It has developed a customer list valued at $22,000, although it is not recorded on Sylvestre’s books. It has in-process R&D activity with an appraised fair value of $30,000. However, the project has not yet reached technological feasibility. All other assets’ and liabilities’ fair values approximate their carrying values. Prepare all journal entries Argo Company should record associated with this information. Be sure to use appropriate form. For online students, I suggest you use the Table function in Canvas.