Supernova Company had the following summarized balance sheet on December 31 of the current year:
|Accounts receivable||$ 350,000|
|Property and plant (net)||600,000|
|Liabilities and Equity|
|Notes payable||$ 600,000|
|Common stock, $5 par||300,000|
|Paid-in capital in excess of par||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 of its $3 par value shares of common stock, when the fair price is $20 per share, for 100% of the common stock of Supernova Company.
- What journal entries will Redstar Corporation record for the investment in Supernova and issuance of stock?
- Prepare a supporting value analysis and determination and distribution of excess schedule
- Prepare Redstar’s elimination of equity and adjustment for determination and distribution entries for the acquisition of Supernova.
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