Question: On July 1, 2014, Push way Corporation issued 100,000 shares of common stock in exchange for all of Stroker Company's common stock. The Push way stock issued had a market value of $500,000 on the date of the exchange. Following are the July 1, 2014, pre-acquisition balance sheets of Push way and Stroker, plus fair value information for Stroker's assets and liabilities.
Required: 1. Provide the journal entry Push way recorded for the acquisition of Stroker, assuming Push way used the acquisition method.
2. What amount will be shown on the July 1, 2014, consolidated balance sheet for the following:
a. Total assets
b. Total liabilities
c. Total equity
3. Now assume the pooling method was used to record the acquisition. Complete requirements 1 and 2. (Note to student:
Ignore the fact that the date in this problem would prohibit the use of the pooling method).