Thumb Company created New Company as a wholly owned subsidiary by transferring assets and accounts payable to New in exchange for its common stock. New recorded the following entry when it received the assets and accounts payable:

Cash		14,000
Accounts Receivable		27,000
Inventory		36,000
Land		20,000
Buildings		84,000
Equipment		75,000
Accounts Payable					10,000
Accumulated DepreciationBuildings					13,000
Accumulated DepreciationEquipment					11,000
Common Stock					33,000
Additional Paid-In Capital					189,000

Required:

a.	What was Thumb's book value of the total assets (not net assets) transferred to New Company?

b.	What amount did Thumb report as its investment in New after the transfer?

c.	What number of shares of $10 par value stock did New issue to Thumb?

d.	What impact did the transfer of assets and accounts payable have on the amount reported by Thumb as total assets?

e.

What impact did the transfer of assets and accounts payable have on the amount that Thumb and the consolidated entity reported as shares outstanding?

	No effect
	Increase in shares outstanding
	Decrease in shares outstanding