O O O C O decrease in other contributed capital O increase in gain on acquisition O decrease in retained earnings. O increase in goodwill.
O O O C O decrease in other contributed capital O increase in gain on acquisition O decrease in retained earnings. O increase in goodwill.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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docs.google.com @
P Corporation issued 10,000 shares of
common stock with a fair value of $25
per share for all the outstanding
common stock of S Company in a
business combination properly
accounted for as an acquisition. The
fair value of S Company's net assets on
that date was $220,000. P Company
also agreed to issue an additional
2,000 shares of common stock with a
fair value of $50,000 to the former
stockholders of S Company as an
earnings contingency. Assuming that
the contingency is expected to be met,
the $50,000 fair value of the additional
shares to be issued should be treated
as a(n) *
decrease in other contributed capital.
increase in gain on acquisition
decrease in retained earnings.
increase in goodwill.
37
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Transcribed Image Text:Gmail
docs.google.com @
P Corporation issued 10,000 shares of
common stock with a fair value of $25
per share for all the outstanding
common stock of S Company in a
business combination properly
accounted for as an acquisition. The
fair value of S Company's net assets on
that date was $220,000. P Company
also agreed to issue an additional
2,000 shares of common stock with a
fair value of $50,000 to the former
stockholders of S Company as an
earnings contingency. Assuming that
the contingency is expected to be met,
the $50,000 fair value of the additional
shares to be issued should be treated
as a(n) *
decrease in other contributed capital.
increase in gain on acquisition
decrease in retained earnings.
increase in goodwill.
37
...
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