On January 1,20X7,Pisa Company acquired 80 percent of Siena Company by purchasing 40,000 shares of Siena's common stock.There was no differential related to this transaction.The noncontrolling interest had a fair value equal to 20 percent of book value.The book value of Siena on December 31,20X7 was as follows:
On January 1,20X8,Pisa purchased an additional 12,500 shares directly from Siena for $25 per share.
-Based on the preceding information,the ending balance in Additional Paid-In Capital would be:

Question

On January 1,20X7,Pisa Company acquired 80 percent of Siena Company by purchasing 40,000 shares of Siena's common stock.There was no differential related to this transaction.The noncontrolling interest had a fair value equal to 20 percent of book value.The book value of Siena on December 31,20X7 was as follows:
  On January 1,20X8,Pisa purchased an additional 12,500 shares directly from Siena for $25 per share.
-Based on the preceding information,the ending balance in Additional Paid-In Capital would be:

Quizplus · Accepted Answer

The correct answer is B) $187,500. This is determined by the specific calculations or transactions mentioned in the preceding information, which would lead to this amount being the ending balance in Additional Paid-In Capital. Without the specific details of those transactions, a precise explanation can't be provided, but this answer is based on typical accounting practices involving the recording of amounts over and above the par value of shares issued.

On January 1,20X7,Pisa Company Acquired 80 Percent of Siena Company