Supernova Company had the following summarized balance sheet on December 31 of the current year: Assets Accounts receivable $ 350,000 Inventory 450,000 Property and plant (net) 600,000 Total $1, 400,000 Liabilities and Equity Notes payable $ 600,000 Common stock, $5 par 300,000 Paid-in-capital in excess of par 400,000 Retained earnings 100,000 Total $1,400,000 The fair value of the inventory and property and plant is $600,000 and $850,000 respectively. Assume that Redstar Corporation exchanges 75,000 0f its $3par value shares of common stock, when the fair price is $20 per share, for 100% of the common stock of Supernova Company. Redstar incurred acquisition costs of $5,500 . Required: What journal entries will Redstar Corporation record for the investment in Supernova and issuance stock? Prepare a supporting value analysis and determination and distribution of excess schedule. Prepare Redstar’s elimination and adjustment entry for the acquisition of Supernova.
Supernova Company had the following summarized balance sheet on December 31 of the current year:
Assets
Inventory 450,000
Property and plant (net) 600,000
Total $1, 400,000
Liabilities and Equity
Notes payable $ 600,000
Common stock, $5 par 300,000
Paid-in-capital in excess of par 400,000
Total $1,400,000
The fair value of the inventory and property and plant is $600,000 and $850,000 respectively.
Assume that Redstar Corporation exchanges 75,000 0f its $3par value shares of common stock, when the fair price is $20 per share, for 100% of the common stock of Supernova Company. Redstar incurred acquisition costs of $5,500 .
Required:
- What
journal entries will Redstar Corporation record for the investment in Supernova and issuance stock? - Prepare a supporting value analysis and determination and distribution of excess schedule.
- Prepare Redstar’s elimination and
adjustment entry for the acquisition of Supernova.
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