Supernova Company had the following summarized balance sheet on December 31, 20X1:
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/share, for 100% of the common stock of Supernova Company. Redstar incurred acquisition costs of $5,000 and stock issuance costs of $5,000.
Required:
a.
What journal entry will Redstar Corporation record for the investment in Supernova?
b.
Prepare a supporting value analysis and determination and distribution of excess schedule
c.
Prepare Redstar's elimination and adjustment entry for the acquisition of Supernova.

Question

Supernova Company had the following summarized balance sheet on December 31, 20X1:
  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/share, for 100% of the common stock of Supernova Company. Redstar incurred acquisition costs of $5,000 and stock issuance costs of $5,000.
Required: 
a.
What journal entry will Redstar Corporation record for the investment in Supernova?
b.
Prepare a supporting value analysis and determination and distribution of excess schedule
c.
Prepare Redstar's elimination and adjustment entry for the acquisition of Supernova.

Quizplus · Accepted Answer

The Answer of Supernova Company had the following summarized balance sheet on December 31, 20X1:
  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/share, for 100% of the common stock of Supernova Company. Redstar incurred acquisition costs of $5,000 and stock issuance costs of $5,000.
Required: 
a.
What journal entry will Redstar Corporation record for the investment in Supernova?
b.
Prepare a supporting value analysis and determination and distribution of excess schedule
c.
Prepare Redstar's elimination and adjustment entry for the acquisition of Supernova.

Supernova Company Had the Following Summarized Balance Sheet on December