In order to reduce the risk associated with a new line of business,Conservative Corporation established Spin Company as a wholly owned subsidiary.It transferred assets and accounts payable to Spin in exchange for its common stock.Spin recorded the following entry when the transaction occurred:

-Based on the preceding information,what amount did Conservative report as its investment in Spin after the transfer of assets and liabilities?
A)$181,000
B)$221,000
C)$263,000
D)$243,000

Question

In order to reduce the risk associated with a new line of business,Conservative Corporation established Spin Company as a wholly owned subsidiary.It transferred assets and accounts payable to Spin in exchange for its common stock.Spin recorded the following entry when the transaction occurred:
 
-Based on the preceding information,what amount did Conservative report as its investment in Spin after the transfer of assets and liabilities?
A)$181,000 
B)$221,000 
C)$263,000 
D)$243,000

Quizplus · Accepted Answer

Conservative reported its investment in Spin as $181,000 after the transfer of assets and liabilities. This is because Conservative transferred assets with a book value of $263,000 and liabilities of $82,000 to Spin. The difference between these two amounts, $181,000, is the amount that Conservative reported as its investment in Spin.

In Order to Reduce the Risk Associated with a New