Question
In order to reduce the risk associated with a new line of business, Conservative Corporation established Spin Company as a wholly owned subsidiary. It transferred
In order to reduce the risk associated with a new line of business, Conservative Corporation established Spin Company as a wholly owned subsidiary. It transferred assets and accounts payable to Spin in exchange for its common stock. Spin recorded the following entry when the transaction occurred:
1. Based on the preceding information, what number of shares of $7 par value stock did Spin issue to Conservative?
A. 10,000 B. 7,000 C. 8,000 D. 25,000
2. Based on the preceding information, what was Conservative's book value of assets transferred to Spin Company?
A. $243,000 B. $263,000 C. $221,000 D. $201,000
1-1
Chapter 01 - Intercorporate Acquisitions and Investments in Other Entities
3. Based on the preceding information, what amount did Conservative report as its investment in Spin after the transfer of assets and liabilities?
A. $181,000 B. $221,000 C. $263,000 D. $243,000
4. Based on the preceding information, immediately after the transfer,
A. Conservative's total assets decreased by $23,000.
B. Conservative's total assets decreased by $20,000.
C. Conservative's total assets increased by $56,000.
D. Conservative's total assets remained the same.
In order to reduce the risk associated with a new line of business, Conservative Corporation established Spin Company as a wholly owned subsidiary. It transferred assets and accounts payable to Spin in exchange for its common stock. Spin recorded the following entry when the transaction occurred:
1. Based on the preceding information, what number of shares of $7 par value stock did Spin issue to Conservative?
A. 10,000 B. 7,000 C. 8,000 D. 25,000
2. Based on the preceding information, what was Conservative's book value of assets transferred to Spin Company?
A. $243,000 B. $263,000 C. $221,000 D. $201,000
1-1
Chapter 01 - Intercorporate Acquisitions and Investments in Other Entities
3. Based on the preceding information, what amount did Conservative report as its investment in Spin after the transfer of assets and liabilities?
A. $181,000 B. $221,000 C. $263,000 D. $243,000
4. Based on the preceding information, immediately after the transfer,
A. Conservative's total assets decreased by $23,000.
B. Conservative's total assets decreased by $20,000.
C. Conservative's total assets increased by $56,000.
D. Conservative's total assets remained the same.
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How To Understand Business Finance
Authors: Bob Cinnamon, Brian Helweg-Larsen
2nd Edition
0749460202, 978-0749460204
