Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company issues 1,000,000 shares of new stock with a fair value of $25/share (par value $15) to acquire 80% of the stock of another

A company issues 1,000,000 shares of new stock with a fair value of $25/share (par value $15) to acquire 80% of the stock of another company. Registration fees for shares issued are $700,000 paid in cash. Out- of-pocket consulting fees connected with the acquisition are $500,000, paid in cash. There is an earnings contingency with an expected present value of $1,000,000. The fair value of the noncontrolling interest at the date of acquisition is $5,000,000, and the book value of the acquired company is $4,000,000. The acquired company has previously unreported identifiable intangible assets of $7,000,000, and its noncurrent assets are overvalued by $2,000,000. The parent and the subsidiary company's Additional Paid-In Capital are 5,000,000 and 3,000,000 before acquisition occurs.

What is the consolidated Additional Paid-In Capital at the date of acquisition, following U.S. GAAP?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Excel caculation on cascade mental health clinic

Answered: 1 week ago

Question

List the components of the strategic management process. page 72

Answered: 1 week ago