Prior to being united in a business combination, Botkins Inc. and Volkerson Corp. had the following stockholders' equity figures:
Botkins issued 56,000 new shares of its common stock valued at $3.25 per share for all of the outstanding stock of Volkerson.
Assume that Botkins acquired Volkerson on January 1, 2010. Immediately afterwards, what is consolidated Common Stock?

Question

Quizplus · Accepted Answer

Botkins issued 56,000 shares of its stock valued at $3.25 per share for the outstanding stock of Volkerson. This means the value of the acquisition was:
56,000 shares x $3.25 per share = $182,000 
The consolidated Common Stock will be the sum of the outstanding Common Stock for both companies after the acquisition:
Botkins Inc. had no Common Stock outstanding prior to the acquisition 
Volkerson Corp. outstanding Common Stock was $92,000 
Therefore, consolidated Common Stock after the acquisition is:
$92,000 + $182,000 = $274,000.

Prior to Being United in a Business Combination, Botkins Inc