Carnes has the following account balances as of December 31, 2017 before an acquisition transaction takes place.
Question:
Carnes has the following account balances as of December 31, 2017 before an acquisition transaction takes place.
Inventory $100,000 Land $400,000 Buildings (net) $500,000 Common Stock ($10 par) $600,000 Additional Paid in capital $200,000 Retained Earnings $200,000
Revenue $450,000 Expenses $250,000
The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On December 31, 2017, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account. What will be the consolidated additional paid-in capital as a result of this acquisition?
a) $750,000.
b) $440,000.
c) $940,000.
d) $740,000.
e) $950,000.
Fundamental Accounting Principles Volume 1
ISBN: 9781259259807
15th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann