Pinehollow acquired all of the outstanding stock of Stonebriar by issuing 100,000 shares of its $1 par value stock. The shares have a fair value of $15 per share. Pinehollow also paid $25,000 in direct acquisition costs. Prior to the transaction, the companies have the following balance sheets: The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively. The journal entry to record the purchase of Stonebriar would include a
A)credit to common stock for $1,500,000.
B)credit to paid-in capital in excess of par for $1,100,000.
C)debit to investment for $1,500,000.
D)debit to investment for $1,525,000.

Question

Pinehollow acquired all of the outstanding stock of Stonebriar by issuing 100,000 shares of its $1 par value stock. The shares have a fair value of $15 per share. Pinehollow also paid $25,000 in direct acquisition costs. Prior to the transaction, the companies have the following balance sheets:  The fair values of Stonebriar's inventory and plant, property and equipment are $700,000 and $1,000,000, respectively. The journal entry to record the purchase of Stonebriar would include a
A)credit to common stock for $1,500,000. 
B)credit to paid-in capital in excess of par for $1,100,000. 
C)debit to investment for $1,500,000. 
D)debit to investment for $1,525,000.

Quizplus · Accepted Answer

The Answer is C

Pinehollow Acquired All of the Outstanding Stock of Stonebriar by Issuing