Planter Corporation used debentures with a par value of $580,000 to acquire 100 percent of Sorden Company's net assets on January 1, 20X2. On that date, the fair value of the bonds issued by Planter was $564,000. The following balance sheet data were reported by Sorden:

 Planter Corporation used debentures with a par value of $580,000 to acquire 100 percent of Sorden Company's net assets on January 1, 20X2. On that date, the fair value of the bonds issued by Planter was $564,000. The following balance sheet data were reported by Sorden:

Balance Sheet Item    Historical Cost    Fair Value
Assets         
Cash and Receivables    $ 55,000    $ 50,000
Inventory    105,000    200,000
Land    60,000    100,000
Plant and Equipment    400,000    300,000
Less: Accumulated Depreciation    (150,000)    
Goodwill    10,000    
Total Assets    $ 480,000    $ 650,000
Liabilities and Equities         
Accounts Payable    $ 50,000    $ 50,000
Common Stock    100,000    
Additional Paid-In Capital    60,000    
Retained Earnings    270,000    
Total Liabilities and Equities    $ 480,000    
Required:
Determine the amount Planter Corporation would record as a gain on bargain purchase and prepare the journal entry Planter would record at the time of the exchange.

 

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