During its inception,Devon Company purchased land for $100,000 and a building for $180,000.After exactly 3 years,it transferred these assets and cash of $50,000 to a newly created subsidiary,Regan Company,in exchange for 15,000 shares of Regan's $10 par value stock.Devon uses straight-line depreciation.Useful life for the building is 30 years,with zero residual value.An appraisal revealed that the building has a fair value of $200,000.
-Based on the information provided,what amount would be reported by Devon Company as investment in Regan Company common stock?

Question

Quizplus · Accepted Answer

The correct answer is A.The investment in Regan Company common stock would be reported at $312,000. This is the sum of the fair value of the land ($100,000), the fair value of the building ($200,000), and the cash transferred ($50,000).

During Its Inception,Devon Company Purchased Land for $100,000 and a Building