Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Carnes has the following account balances as of May 1, 2012 before an acquisition transaction takes place. Inventory $100,000 Land $400,000 Buildings (net) $500,000 Common

Carnes has the following account balances as of May 1, 2012 before an acquisition transaction takes place.

Inventory $100,000 Land $400,000 Buildings (net) $500,000 Common Stock ($10 par) $600,000 Additional Paid in capital $200,000 Retained Earnings $200,000

Revenue $450,000 Expenses $250,000

The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2012, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account. What will be the consolidated additional paid-in capital as a result of this acquisition?

a) $750,000. b) $440,000. c) $940,000. d) $740,000. e) $950,000.

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

Philosophy Of Auditing

Authors: Robert K. Mautz

19th Edition

0865390029, 978-0865390027

More Books

Students also viewed these Accounting questions