Chapel Hill Company had common stock of $350,000 and retained earnings of $490,000.Blue Town Inc.had common stock of $700,000 and retained earnings of $980,000.On January 1,2009,Blue Town issued 34,000 shares of common stock with a $12 par value and a $35 fair value for all of Chapel Hill Company's outstanding common stock.This combination was accounted for as an acquisition.Immediately after the combination,what was the consolidated net assets?

Question

Quizplus · Accepted Answer

The consolidated net assets are calculated by adding the fair value of the consideration given by Blue Town ($35 * 34,000 shares = $1,190,000) to the net assets of Blue Town ($700,000 common stock + $980,000 retained earnings = $1,680,000), resulting in $2,870,000.

Chapel Hill Company Had Common Stock of $350,000 and Retained