Major Corporation Issues 1,000,000 Common Shares for All of the Outstanding

question 44

Essay

Major Corporation issues 1,000,000 common shares for all of the outstanding common shares of Minor Corporation on August 1, Year 1. The shares issued have a fair market value of $40.
In addition, the merger agreement provides that if the market price of Major's shares is below $60 two years from the date of the merger, Major will issue additional shares to the former shareholders of Minor Corporation in an amount that will compensate them for their loss of value.
Major predicts that there is a 25% probability that Major's shares will be trading at $59 per share and a 75% probability that they will be trading at greater than $60 per share two years from the date of the merger. Assume a discount rate of 7%.
Required:
Prepare the journal entry to record the issuance of the shares.

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Definitions:

Language

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Patterns of Inequality

Systematic disparities between groups in society, often related to wealth, access to resources, or social status.

Characteristics of Culture

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