Carnes has the following account balances as of May 1, 2010 before an acquisition transaction takes place.

The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2010, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account.
At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?

Question

Carnes has the following account balances as of May 1, 2010 before an acquisition transaction takes place.

The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2010, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account.
At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?

Quizplus · Accepted Answer

The Answer of Carnes has the following account balances as of May 1, 2010 before an acquisition transaction takes place.

The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2010, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account.
At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?

Carnes Has the Following Account Balances as of May 1