Problem
Peal Corporation issued 4,000 shares of its $10 par value stock with a market value of $85,000 to acquire 85 percent of the common stock of Seed Company on August 31, 20X3. Seed's fair value was determined to be $100,000 on that date. Peal had previously purchased 15 percent of Seed's common stock for $9,000 on January 31, 20X1, and had carried this investment at fair value on its balance. Peal reported this investment at $15,000 on its balance sheet at August 31, 20X3, immediately prior to acquiring the remaining 85 percent of Seed's shares. On August 31, 20X3, Peal also paid appraisal fees of $3,500 and stock issue costs of $2,000 incurred in completing the acquisition of the additional shares.
1. Prepare the journal entries to be recorded by Peal in completing the acquisition of the additional shares of Seed.
2. Record the acquisition of ownership in Seed Company by the issuance of shares.Record the payment of appraisal fees incurred in completing the acquisition of the additional shares.
3. Record the payment of appraisal fees and stock issuance costs.Record the payment of stock issue costs incurred in completing the acquisition of the additional shares.
4. Record the issue of shares of its par value stock with a market value to acquire of the common stock of Seed Company.