AB Inc. acquired 100% stake in CD Inc. on January 1, 2013 by issuing 20,000 shares of common stock. The shares have a fair value of $15 per share. AB also paid $30,000 in stock issuance costs. Just before acquisition, AB had Common stock of $360,000 and Additional paid-in capital of 20,000. CD had Common stock of $80,000 and Additional paid- in capital of $40,000 and Retained earnings of $80,000. Assuming both companies continue to operate separately, consolidation entry (S) would include: Select one: O a. A credit to Common Stock with $80,000 O b. A credit to Investment account with $200,000 O c. A debit to Additional paid-in capital with $20,000 O d. A credit to retained earnings with $80,000
AB Inc. acquired 100% stake in CD Inc. on January 1, 2013 by issuing 20,000 shares of common stock. The shares have a fair value of $15 per share. AB also paid $30,000 in stock issuance costs. Just before acquisition, AB had Common stock of $360,000 and Additional paid-in capital of 20,000. CD had Common stock of $80,000 and Additional paid- in capital of $40,000 and Retained earnings of $80,000. Assuming both companies continue to operate separately, consolidation entry (S) would include: Select one: O a. A credit to Common Stock with $80,000 O b. A credit to Investment account with $200,000 O c. A debit to Additional paid-in capital with $20,000 O d. A credit to retained earnings with $80,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![AB Inc. acquired 100% stake in CD
Inc. on January 1, 2013 by issuing
20,000 shares of common stock. The
shares have a fair value of $15 per
share. AB also paid $30,000 in stock
issuance costs. Just before
acquisition, AB had Common stock of
$360,000 and Additional paid-in
capital of 20,000. CD had Common
stock of $80,000 and Additional paid-
in capital of $40,000 and Retained
earnin
of
Assuming both
companies continue to operate
separately, consolidation entry (S)
would include:
Select one:
O a. A credit to Common Stock with
$80,000
O b. A credit to Investment account
with $200,000
O c. A debit to Additional paid-in
capital with $20,000
O d. A credit to retained earnings
with $80,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6f2977c6-1150-4078-99aa-35997c4af19c%2Fc7f96331-ce21-4e6e-9279-080c4a408389%2Fknm4gvv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:AB Inc. acquired 100% stake in CD
Inc. on January 1, 2013 by issuing
20,000 shares of common stock. The
shares have a fair value of $15 per
share. AB also paid $30,000 in stock
issuance costs. Just before
acquisition, AB had Common stock of
$360,000 and Additional paid-in
capital of 20,000. CD had Common
stock of $80,000 and Additional paid-
in capital of $40,000 and Retained
earnin
of
Assuming both
companies continue to operate
separately, consolidation entry (S)
would include:
Select one:
O a. A credit to Common Stock with
$80,000
O b. A credit to Investment account
with $200,000
O c. A debit to Additional paid-in
capital with $20,000
O d. A credit to retained earnings
with $80,000
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