Scenario 2-1 Pinehollow Acquired All of the Outstanding Stock of Stonebriar by Stonebriar

question 24

Multiple Choice

Scenario 2-1
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.
-Refer to Scenario 2-1. The journal entry to record the purchase of Stonebriar would include a

• A) credit to common stock for $1,500,000.
• B) credit to additional paid-in capital for $1,100,000.
• C) debit to investment for $1,500,000.
• D) debit to investment for $1,525,000.

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Definitions:

Sclera

The white or sclerotic outer coat of the eye.

Musculature

The system of muscles within the body, contributing to physical strength, movement, and posture.

Rule Out

To eliminate or exclude something as a possibility through investigation or evidence.

Abbreviation R/O

Stands for "Rule Out," used in medical context to indicate excluding a diagnosis.