Hoyt Corporation agreed to the following terms in order to acquire the net assets of Brown Company on January 1, 2018: (1.) To issue 400 shares of common stock ($10 par) with a fair value of $45 per share.
(2)) To assume Brown's liabilities which have a book value of $1,600 and a fair value of $1,500.
On the date of acquisition, the consideration transferred for Hoyt's acquisition of Brown would be
A) $18,000.
B) $16,500.
C) $20,000.
D) $18,500.
E) $19,500.

Question

Quizplus · Accepted Answer

The consideration transferred includes the fair value of the shares issued and the fair value of the liabilities assumed. The shares are valued at 400 shares x $45 = $18,000. The liabilities assumed are valued at $1,500. Therefore, the total consideration transferred is $18,000 + $1,500 = $19,500.

Hoyt Corporation Agreed to the Following Terms in Order to Acquire