Would someone help me with the acquistion entries. Thank you! Following are the
ID: 2712236 • Letter: W
Question
Would someone help me with the acquistion entries. Thank you!
Following are the account balances of Miller Company and Richmond Company as of December 31st, 2013. The fair value of the net assets of Richmond is equal to the book value of the net assets. (Therefore, the net assets are purchased at book value.)
Additional Information (not reflected in preceding figures)
On December 31, Miller issues 20,000 shares of its $20 par value common stock for all of the outstanding shares of Richmond Company.The market value of the stock is $30 per share.
In creating this combination, Miller pays $5,000 in stock issue costs and $15,000 in accounting and legal fees.
Using the acquisition method, prepare the necessary journal entries if Miller dissolves Richmond so it is no longer a separate legal entity.
NOTE: Remember that the acquisition is taking place on December 31, 2013.
Miller Company
Book Value
12/31
Richmond Company
Book Value
12/31
Cash
$600,000
$200,000
Receivable
900,000
300,000
Inventory
1,100,000
600,000
Building & Equipment, Net
9,000,000
800,000
Total Assets
11,600,000
1,900,000
Accounts payable
$400,000
$200,000
Notes payable
3,400,000
1,100,000
Common stock--$20 par value
2,000,000
Common stock--$5 par value
220,000
Additional paid in capital
900,000
100,000
Retained earnings
4,900,000
280,000
Total liabilities & equity
11,600,000
1,900,000
Retained earnings 1/1
2,300,000
130,000
Revenues
6,000,000
900,000
Expenses
3,400,000
750,000
Miller Company
Book Value
12/31
Richmond Company
Book Value
12/31
Cash
$600,000
$200,000
Receivable
900,000
300,000
Inventory
1,100,000
600,000
Building & Equipment, Net
9,000,000
800,000
Total Assets
11,600,000
1,900,000
Accounts payable
$400,000
$200,000
Notes payable
3,400,000
1,100,000
Common stock--$20 par value
2,000,000
Common stock--$5 par value
220,000
Additional paid in capital
900,000
100,000
Retained earnings
4,900,000
280,000
Total liabilities & equity
11,600,000
1,900,000
Retained earnings 1/1
2,300,000
130,000
Revenues
6,000,000
900,000
Expenses
3,400,000
750,000
Explanation / Answer
guidelines, not capitalized)
understood the requirement , attached is the JV for merger
JV entry for acquisition in the books of Miller Date 31.12.2013. Account Dr $ Cr $ Investment in Miller Co. 600,000 Commom Stock 400,000 Additional Paid in Capital 200,000 (recording investment against ashare issue at MV of shares) Additional Paid in Capital 5,000 Cash 5,000 (stock issue cost) Leagal & Accounting Expense 15,000 Cash 15,000 (Accounting and leag fees expensed out as per IFRSguidelines, not capitalized)
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