Acquisition in Multiple Steps
Deal Corporation issued 4,000 shares of its $10 par value stock with a market value of $85,000 to acquire 85 percent ownership of Mead Company on August 31, 20X3. The fair value of Mead was determined to be $100,000 on that date. Deal had earlier purchased 15 percent of Mead’s shares for $9,000 and used the cost method in accounting for its investment in Mead. Deal later paid appraisal fees of $3,500 and stock issue costs of $2,000 incurred in completing the acquisition of the additional shares.
Required
Give the journal entries to be recorded by Deal in completing the acquisition of the additional shares of Mead.
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