Required: Prepare both (a) the journal entry to record the business combination and (b) the balance sheet (in good form as discussed in class) of Howe Corporation on July 1, 2023 after the combination.
Required: Prepare both (a) the journal entry to record the business combination and (b) the balance sheet (in good form as discussed in class) of Howe Corporation on July 1, 2023 after the combination.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 25E
Related questions
Question
![On July 1, 2023, Howe Corporation issues 2,000,000 shares of its common stock for all of Essex
Corporation's outstanding shares and Essex is dissolved. The fair value of Howe's common stock
on that date is $100 per share. The book values and fair values of the accounts for each corporation
at March 1, 2019 are as follows:
Assets
Cash
Accounts receivable - net
Inventories
Other current assets
Plant assets
Accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Long-term debt
Common stock ($1 par)
Additional paid-in capital
Retained earnings
Total equities
Howe Corporation
Book Value
$ 25,000,000
3,000,000
10,000,000
5,000,000
15,000,000
-6,000,000
$ 52,000,000
Fair Value
$ 25,000,000
4,000,000
8,000,000
9,000,000
21,000,000
$ 14,000,000 $ 14,000,000
10,000,000
11,500,000
15,000,000
5,000,000
8,000,000
$ 52,000,000
Essex Corporation
Fair Value
Book Value
$80,000,000
$80,000,000
20,000,000
20,000,000
20,000,000 25,000,000
10,000,000
9,000,000
150,000,000
110,000,000
-45,000,000
$ 235,000,000
$30,000,000 $30,000,000
50,000,000 46,000,000
120,000,000
10,000,000
25,000,000
$ 235,000,000
Required: Prepare both (a) the journal entry to record the business combination and (b) the balance
sheet (in good form as discussed in class) of Howe Corporation on July 1, 2023 after the combination.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ffe53150b-08b1-4359-9791-3b8f56dc6d4b%2F5c89c4fc-3eb2-4f92-9b24-d2a26d3c6253%2Frg0lazd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On July 1, 2023, Howe Corporation issues 2,000,000 shares of its common stock for all of Essex
Corporation's outstanding shares and Essex is dissolved. The fair value of Howe's common stock
on that date is $100 per share. The book values and fair values of the accounts for each corporation
at March 1, 2019 are as follows:
Assets
Cash
Accounts receivable - net
Inventories
Other current assets
Plant assets
Accumulated depreciation
Total assets
Liabilities and Stockholders' Equity
Accounts payable
Long-term debt
Common stock ($1 par)
Additional paid-in capital
Retained earnings
Total equities
Howe Corporation
Book Value
$ 25,000,000
3,000,000
10,000,000
5,000,000
15,000,000
-6,000,000
$ 52,000,000
Fair Value
$ 25,000,000
4,000,000
8,000,000
9,000,000
21,000,000
$ 14,000,000 $ 14,000,000
10,000,000
11,500,000
15,000,000
5,000,000
8,000,000
$ 52,000,000
Essex Corporation
Fair Value
Book Value
$80,000,000
$80,000,000
20,000,000
20,000,000
20,000,000 25,000,000
10,000,000
9,000,000
150,000,000
110,000,000
-45,000,000
$ 235,000,000
$30,000,000 $30,000,000
50,000,000 46,000,000
120,000,000
10,000,000
25,000,000
$ 235,000,000
Required: Prepare both (a) the journal entry to record the business combination and (b) the balance
sheet (in good form as discussed in class) of Howe Corporation on July 1, 2023 after the combination.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Cornerstones of Financial Accounting](https://www.bartleby.com/isbn_cover_images/9781337690881/9781337690881_smallCoverImage.gif)
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
![Individual Income Taxes](https://www.bartleby.com/isbn_cover_images/9780357109731/9780357109731_smallCoverImage.gif)
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT