During its inception, Devon Company purchased land for $100,000 and a building for $180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal revealed that the building has a fair value of $200,000.

1. Based on the information provided, at the time of the transfer, Regan Company should record:

(1) Building at $180,000 and no accumulated depreciation.

(2) Building at $162,000 and no accumulated depreciation.

(3) Building at $200,000 and accumulated depreciation of $24,000.

(4) Building at $180,000 and accumulated depreciation of $18,000.

2. Based on the information provided, what amount would be reported by Devon Company as investment in Regan Company common stock?

(1) $312,000

(2) $180,000

(3) $330,000

(4) $150,000

3. Based on the preceding information, Regan Company will report

(1) Additional paid-in capital of $0.

(2) Additional paid-in capital of $150,000.

(3) Additional paid-in capital of $162,000.

(4) Additional paid-in capital of $180,000.

Answer rating: 100% (QA)

1 The R Company should record the building at 180000 and accumulated depreciation of 1800 There... View the full answer