Question

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:


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 $5 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 sharesoutstanding?


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  • CreatedMay 23, 2014
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