On January 1, 2005, Myna Corporation issued 10,000 shares of its own $10 par val

Question

On January 1, 2005, Myna Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of Berry Corporation in an acquisition. Myna common stock at January 1, 2005 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows: Myna Berry Book Value Berry Book Value Fair Value Cash $ 25,000 $ 12,000 $ 12,000 Inventories 55,000 32,000 36,000 Other current assets 110,000 90,000 110,000 Land 100,000 30,000 90,000 Plant and equipment-net 660,000 250,000 375,000 $ 950,000 $ 414,000 $ 623,000 Liabilities $ 220,000 $ 50,000 $ 50,000 Capital stock, $10 par value 500,000 100,000 Additional paid-in capital 170,000 40,000 Retained earnings 60,000 224,000 $ 950,000 $ 414,000 Required: 1 Prepare the journal entry on Myna Corporation’s books to account for the business combination. 2 Prepare a consolidated balance sheet for Myna Corporation and Subsidiary immediately after the business combination. On January 1, 2005, Myna Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of Berry Corporation in an acquisition. Myna common stock at January 1, 2005 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows: Myna Berry Book Value Berry Book Value Fair Value Cash $ 25,000 $ 12,000 $ 12,000 Inventories 55,000 32,000 36,000 Other current assets 110,000 90,000 110,000 Land 100,000 30,000 90,000 Plant and equipment-net 660,000 250,000 375,000 $ 950,000 $ 414,000 $ 623,000 Liabilities $ 220,000 $ 50,000 $ 50,000 Capital stock, $10 par value 500,000 100,000 Additional paid-in capital 170,000 40,000 Retained earnings 60,000 224,000 $ 950,000 $ 414,000 Required: 1 Prepare the journal entry on Myna Corporation’s books to account for the business combination. 2 Prepare a consolidated balance sheet for Myna Corporation and Subsidiary immediately after the business combination.

Explanation / Answer

1) Investment in Berry Co.700,000

Common stock 100,000

Paid-in capital 600,000

2)

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