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PR Company pays $10,000 in cash and issues no-par stock with a fair value of $40,000 to acquire all of SX Corporations net assets. SXs

PR Company pays $10,000 in cash and issues no-par stock with a fair value of $40,000 to acquire all of SX Corporations net assets. SXs balance sheet at the date of acquisition is as follows:

SX Corporation
Book value Fair value
Current assets $ 2,000 $ 4,200
Property, plant & equipment, net 10,000 6,000
Identifiable intangible assets 4,000 14,000
Total assets $16,000
Current liabilities $ 1,600 $ 2,000
Long-term debt 12,000 11,600
Capital stock 5,000
Retained earnings 8,000
Accumulated other comprehensive income (1,000)
Treasury stock (9,600)
Total liabilities & equity $16,000

PRs consultants find these items that are not reported on SXs balance sheet:

Fair value
Potential contracts with new customers $ 8,000
Advanced production technology 4,000
Future cost savings 2,000
Customer lists 1,000

Outside consultants are paid $200 in cash, and registration fees to issue PRs new stock are $400. The question below relates to the entry or entries PR makes to record the acquisition on its books.

PR credits capital stock in the amount of

$40,000

$50,000

$39,600

$39,200

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