Internet Corporation is considering the acquisition of Homepage Corporation and has obtained the following audited condensed balance sheet:

Homepage Corporation
Balance Sheet
December 31, 2016
Assets
Liabilities and Equity
Current assets $ 40,000
Current Liabilities $ 60,000
Land 20,000
Capital Stock (50,000

Buildings (net) 80,000
shares, $1 par value) 50,000
Equipment (net) 60,000
Other Paid-in Capital 20,000

Retained Earnings 70,000

$200,000

$200,000

Internet also acquired the following fair values for Homepage's assets and liabilities:

Current assets $ 55,000
Land 60,000
Buildings (net) 90,000
Equipment (net) 75,000
Current Liabilities (60,000)

$220,000

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:

a. Internet pays cash for Homepage Corporation and incurs $5,000 of acquisition costs.

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.

Debit Credit
a. Current assets 55,000

Land 60,000

Buildings 90,000

Equipment 75,000

Goodwill ($280,000 - $220,000) 60,000

Acquisition expense 5,000

Current liabilities
60,000

Cash
285,000

Debit Credit
b. Current assets 55,000

Land 60,000

Buildings 90,000

Equipment 75,000

Goodwill 60,000

Current liabilities
60,000

Common stock
28,000

Paid-in capital in excess of par
252,000

Paid-in capital in excess of par * 5,000

Cash
5,000
*Alternatively, this amount could be charged to Acquisition Expense.