Question
5) Papi Corporation purchased 100,000 previously unissued shares of Squish Company's $10 par value common stock directly from Squish for $2,200,000. Squish's stockholders' equity immediately
5) Papi Corporation purchased 100,000 previously unissued shares of Squish Company's $10 par value common stock directly from Squish for $2,200,000. Squish's stockholders' equity immediately before the investment by Papi consisted of $3,000,000 of common stock and $4,800,000 in retained earnings. What is Papi's book value of equity in the net assets of Squish? (use the grid below for your Calculations and answer)
Squish Shares outstanding before issue of new shares | 300,000 | |
+ Shares issued to Papi |
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= Total shares outstanding |
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Percentage owned by Papi |
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Value of Stockholders' equity before issue of new shares | $7,800,000 | |
+Investment by Papi |
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=Stockholders' equity after Papi investment |
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Papi's percentage ownership |
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= Book value of Papi's interest |
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