Supernova Company Had the Following Summarized Balance Sheet on December

Essay

Supernova Company had the following summarized balance sheet on December 31 of the current year:
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 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.
Required:
a.What journal entries will Redstar Corporation record for the investment in Supernova and issuance of stock?
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.