Stock acquisition mcdermott corporation has been in the midst of a major expansion program. much of its growth had been internal, but in 20x1 mcdermott decided to continue its expansion through the acqui- sition of other companies. the first company acquired was tippy inc., a small manufacturer of inertial guidance systems for aircraft and missiles. on june 10, 20x1, mcdermott issued 17,000 shares of its $25 par common stock for all 40,000 of tippy's $10 par common shares. at the date of combination, tippy reported additional paid-in capital of $100,000 and retained earnings of $350,000. mcdermott's stock was selling for $58 per share immediately prior to the combination. subsequent to the combination, tippy operated as a subsidiary of mcdermot.