Kaplan Corporation acquired Star, Inc , on January 1, 2017, by issuing 13,000 shares of common stock with a $10 per share par value and a $23 market value This transaction resulted in recognizing $62,000 of goodwill Kaplan also agreed to compensate Star 's former owners for any difference if Kaplan...

The correct option is B The parents a ...

Kaplan Corporation acquired Star, Inc., on January 1, 2017, by issuing 13,000 shares of common stock with

Question:

Kaplan acquired Star, Inc., on January 1, 2017, by issuing 13,000 shares of with a $10 per share and a $23 market value. This transaction resulted in recognizing $62,000 of . Kaplan also agreed to compensate Star's former owners for any difference if Kaplan's stock is worth less than $23 on January 1, 2018. On January 1, 2018, Kaplan issues an additional 3,000 shares to Star's former owners to honor the contingent consideration agreement. Which of the following is true?
a. The fair value of the number of shares issued for the contingency increases the Goodwill account at January 1, 2018.
b. The parent's additional paid-in capital from the contingent equity recorded at the acquisition date is reclassified as a regular issue on January 1, 2018.
c. All of the subsidiary's asset and liability accounts must be revalued for consolidation purposes based on their fair values as of January 1, 2018.
d. The additional shares are assumed to have been issued on January 1, 2017, so that a retrospective adjustment is required
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...