Supernova Company Had the Following Summarized Balance Sheet on December

question 40

Essay

Supernova Company had the following summarized balance sheet on December 31 of the current year:
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$\begin{array}{lr}\text { Assets }\\\text { Accounts receivable } & \$ 200,000 \\\text { Inventory } & 450,000 \\\text { Property and plant (net) } & 600,000 \\\text { Goodwill } & \underline{150,000} \\\quad \text { Total } & \$ \underline{1,400,000}\\\\\text {Liabilities and Equity}\\\text { Notes payable } & \$ 600,000 \\\text { Common stock, } \$ 5 \text { par } & 300,000 \\\text { Paid-in capital in excess of par } & 400,000 \\\text { Retained earnings } & 100,000 \\\quad \text { Total } & \$ 1,400,000\end{array}$ The fair value of the inventory and property and plant is $600,000 and $850,000, respectively.
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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.Redstar incurred acquisition costs of $5,000 and stock issuance costs of $5,000.
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Required:
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a.What journal entries will Redstar Corporation record for the investment in Supernova and issuance of stock?
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b.Prepare a supporting value analysis and determination and distribution of excess schedule
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c.Prepare Redstar's elimination and adjustment entry for the acquisition of Supernova.

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Definitions:

Neural Transmission

The process by which nerve cells communicate with each other through electrical and chemical signals.

Positive Ions

Atoms or molecules that have lost one or more electrons, resulting in a net positive charge.

Neural Impulse

Electrical signals transmitted along neurons, facilitating communication within the nervous system.

Cell Body

The central part of a neuron that contains the nucleus and integrates signals received by the dendrites.