Answer & Explanation:Edwards
Inc. entered into negotiations to purchase Freidman Inc. Freidman
originally asked Edwards to pay $1,600,000, but eventually both parties
agreed to a price of $1,500,000 and for Edwards to assume $500,000 of
Freidman’s liabilities. The assets of Freidman were appraised for
$1,400,000.
a) Why would Edwards be
willing to pay $1,500,000 and assume $500,000 of Freidman’s debts when
the assets were only worth $1,400,000?
b) Prepare Edward’s entry to record the purchase of Freidman.
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