Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1, Year One, Parent Company acquires 100 percent of the outstanding shares of Kid Company by issuing its own stock worth $12 million.

On January 1, Year One, Parent Company acquires 100 percent of the outstanding shares of Kid Company by issuing its own stock worth $12 million. The shares of Kid had been worth only $11 million in the period leading up to the acquisition but Parent had to pay a premium in order to obtain all of the stock. Parent paid an additional $200,000 in cash to attorneys as direct consolidation costs and another $150,000 in stock issuance costs. According to US GAAP, what should be the basis for reporting the assets and liabilities of Kid within consolidated financial statements created on the date of acquisition?

A) $11,350,000

B) $12,000,000

C) $12,200,000

D) $12,350,000

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

Fraud Examination And Prevention

Authors: W. Steve Albrecht, Chad O. Albrecht

1st Edition

053872689X, 978-0538726894

More Books

Students also viewed these Accounting questions

Question

Does limx1 sin-1 x exist? Explain.

Answered: 1 week ago