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Paul, Inc. acquired 100% of ErniesInc. net assets on Janu

    Paul, Inc. acquired 100% of Ernie’sInc. net assets on January 1, 2009 for $300,000 in cash and paid 10,000 foracquisition cost. The following facts relate to the acquisitions:Accounts Receivable50,000Inventory80,000Equipment, Net50,000Land and Building, Net120,000Total Assets$300,000Bonds Payable90,000Common stock100,000Retained earnings110,000Total Liabilities andStockholders’ Equity$300,000Fair value of acquired net assets:Accounts receivable$50,000Inventory100,000Equipment30,000Land and building180,000Customer list30,000Bonds payable100,000In 3–5 pages, complete thefollowing:Determine and provide the proper accounting entry torecord the subsidiary on Paul’s books on January 1, 2009 as if Ernie wasdissolved.Determine and provide the proper accounting entry torecord the subsidiary on Ernie’s books on January 1, 2009 as if Ernie wasdissolved.While acquisitions are often friendly, there arenumerous occasions when a party does not want to be acquired. Discusspossible defensive strategies that firms can implement to fend off ahostile takeover attempt.

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