Pomograte Corporation bought 75% of Sycamore Company's common stock,with a book value of $900,000,on January 2,2014 for $750,000.The law firm of Dewey,Cheatam and Howe was paid $55,000 to facilitate the purchase.At what amount should Pomograte's Investment in Sycamore account be reported on January 2,2014?
A)$675,000
B)$695,000
C)$750,000
D)$845,000

Question

Quizplus · Accepted Answer

The investment should be recorded at the purchase price of $750,000. The legal fees are not included in the investment account but are expensed as incurred.

Pomograte Corporation Bought 75% of Sycamore Company's Common Stock,with a Book