Question
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.
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