Use the following information to answer bellow Questions:
PC Company purchased all of the common stock of Silicon Company by issuing 2,000,000 shares of its $0.50 par value common stock, with a market value of $25/share. PC Company incurred $150,000 in registration and issuing costs, and $100,000 in consulting and legal fees, paid in cash. The book value of Silicon Company at the date of acquisition was as follows:
$\begin{array}{|l|c|}
\hline \text { Capital stock. } & \$ 4,000,000 \
\hline \text { Retained deficit } & \{1,500,000\} \
\hline \text { Accumulated other comprehensive income. } & 400,000 \
\hline \text { Total book value } & \$ 2,900,000 \
\hline
\end{array}$ The carrying values of Silicon's reported assets and liabilities approximated fair value at the date of acquisition, but it has $3,000,000 in customer lists, not reported on its balance sheet.
-Eliminating entry (R) includes a credit to Investment in Silicon for:

Question

Use the following information to answer bellow Questions:
PC Company purchased all of the common stock of Silicon Company by issuing 2,000,000 shares of its $0.50 par value common stock, with a market value of $25/share. PC Company incurred $150,000 in registration and issuing costs, and $100,000 in consulting and legal fees, paid in cash. The book value of Silicon Company at the date of acquisition was as follows:
 $\begin{array}{|l|c|}
\hline \text { Capital stock. } & \$ 4,000,000 \
\hline \text { Retained deficit } & \{1,500,000\} \
\hline \text { Accumulated other comprehensive income. } & 400,000 \
\hline \text { Total book value } & \$ 2,900,000 \
\hline
\end{array}$ The carrying values of Silicon's reported assets and liabilities approximated fair value at the date of acquisition, but it has $3,000,000 in customer lists, not reported on its balance sheet.
-Eliminating entry (R) includes a credit to Investment in Silicon for:

Quizplus · Accepted Answer

The investment in Silicon is recorded at the fair value of the consideration given, which is 2,000,000 shares at $25/share, totaling $50,000,000. The registration and issuing costs of $150,000 are deducted from this amount, resulting in a net investment of $49,850,000. The consulting and legal fees are expensed and do not affect the investment amount. The credit to Investment in Silicon is the net investment amount minus the book value of Silicon's equity ($2,900,000), resulting in $47,100,000.

Use the Following Information to Answer Bellow Questions: PC Company

Use the Following Information to Answer Bellow Questions:
PC Company