1. Business
  2. Accounting
  3. minneapolis manufacturing incs ceo has asked you to provide the...

Question: minneapolis manufacturing incs ceo has asked you to provide the...

Question details
  1. Minneapolis Manufacturing Inc.’s CEO has asked you to provide the relevant journal entries using the following acquisition information.

Note: The CEO has not decided whether they will purchase Bloomington Re-Bar Company using the “Asset Acquisition Method” or the “Stock Acquisition Method.”

Bloomington Re-Bar Company

                                                                               Book value              Fair Value

                   Cash                                                   450,000                     450,00

                   Account Receivable                       1,950,000                  1,785,000

                   Inventory                                         3,650,000                   3,250,000

                   Building(net)                                   2,500,000                   2,600,000

                   Equipment                                       3,250,000                   2,200,000

                   Land                                                   110,000                      1,500,000

                   Account payable                             2,850,000                   3,125,000

                 Mortgage Payable                              1,100,000                 1,100,000

           Other identified during due diligence

                  Patent                                                   0                                 6,000,000

               Environmental Clean up liability     0                                  3,000,000

Required:

  1. Prepare the journal entry assuming Minneapolis Manufacturing Inc. decided to purchase Bloomington Re-Bar Company for $13,000,000 in an Asset Acquisition.
  1. Prepare the journal entry assuming Minneapolis Manufacturing Inc. decided to purchase 100% of Bloomington Re-Bar Company for $13,000,000 in a Stock Acquisition.
  2. Prepare the journal entry assuming Minneapolis Manufacturing Inc. decided to purchase 75% of Bloomington Re-Bar Company for $9,000,000 in a Stock Acquisition.
  1. For scenario C. (75% Stock Acquisition - above) prepare a CAD. In addition, prepare the necessary workpaper elimination entries necessary to complete a consolidated financial statement workpaper.

Note: Bloomington Re-Bar Company’s Stockholders’ Equity consists of the following:      

Common Stock                        $     25,000

                                    APIC                                             $2,975,000

                                    Retained Earnings $4,960,000

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution