Rivendell Corporation and Foster Company merged as of January 1,20X9.To effect the merger,Rivendell paid finder's fees of $40,000,legal fees of $13,000,audit fees related to the stock issuance of $10,000,stock registration fees of $5,000,and stock listing application fees of $4,000.
-Based on the preceding information,under the acquisition method:

Question

Quizplus · Accepted Answer

Under the acquisition method, direct costs of issuing stock, such as audit fees related to the stock issuance ($10,000), stock registration fees ($5,000), and stock listing application fees ($4,000), totaling $19,000, are treated as a reduction in the paid-in capital. Finder's fees and legal fees are not considered stock issue costs and are treated differently.

Rivendell Corporation and Foster Company Merged as of January 1,20X9