Incomplete Data on Creation of Subsidiary Plumb Company created Stew Company as a wholly owned subsidiary by

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Incomplete Data on Creation of Subsidiary Plumb Company created Stew Company as a wholly owned subsidiary by transferring assets and accounts payable to Stew in exchange for its common stock. Stew recorded the following entry when it received the assets and accounts payable:

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a. What was Plumb’s book value of the total assets (not net assets) transferred to Stew Company?

b. What amount did Plumb report as its investment in Stew after the transfer?

c. What number of shares of $5 par value stock did Stew issue to Plumb?

d. What impact did the transfer of assets and accounts payable have on the amount reported by Plumb as total assets?

e. What impact did the transfer of assets and accounts payable have on the amount that Plumb and the consolidated entity reported as shares outstanding?

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Advanced Financial Accounting

ISBN: 9781265042615

13th International Edition

Authors: Theodore E. Christensen, David M. Cottrell, Cassy Budd

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