Question
REWORD BELOW: How does the issuance of these shares affect the stockholders' equity accounts of Privacy First, the parent? The par value of the 20,000
REWORD BELOW:
How does the issuance of these shares affect the stockholders' equity accounts of Privacy First, the parent?
The par value of the 20,000 shares issued is recorded as an increase of $20,000 in the Common Stock account. The $74 fair value in excess of par value ($75 - $1) is an increase to additional paid-in capital of $1,480,000 ($74 20,000 shares).
f. What is the effect of SafeData's revenues and expenses on consolidated totals? Why?
Revenues and expenses of the subsidiary from the period prior to the combination are omitted from the consolidated totals. Only the operational figures for the subsidiary after the purchase are applicable to the business combination. The previous owners earned any previous profits.
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