Question
On January 1, 2018, Nylah Corporation issued 10,000 shares of its own $10 par value common stock for 9,000 shares of the outstanding stock of
On January 1, 2018, Nylah 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. Nylah common stock at January 1, 2018 was selling at $70 per share. Just before the business combination, balance sheet information of the two corporations was as follows:
Nylah Book Value: Berry Book Value: Berry 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
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
Required:
1. Show preliminary computations
2. Prepare a schedule to allocate excess of cost over book value
3. Prepare the journal entry on Nylah Corporation's books to account for the business combination
4. Prepare a consolidated balance sheet for Nylah Corporation and Subsidiary immediately after the business combination. Properly label all items. Complete working paper before preparing consolidated balance sheet.
5. Give all eliminating journal entries
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