On January 1, 2024, Nichols Company acquired 80% of Smith Company's common stock and 40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was $1,200,000 for the common and $124,000 for the preferred. There was no premium in the value of consideration transferred. Any excess acquisition-date fair value over book value is considered goodwill. The capital structure of Smith immediately prior to the acquisition is: Common stock, $10 par value (50,000 shares outstanding) Preferred stock, 6% cumulative, $100 par value, 3,000 shares outstanding Additional paid in capital Retained earnings Total stockholders' equity The consolidation entry at date of acquisition will include (referring to Smith): Multiple Choice O < Prev 9 of 20 $ 500,000 Debit Common stock $500,000, debit Preferred stock $120,000, and debit Additional paid-in capital $200,000. M ED 300,000 200,000 500,000 $ 1,500,000 Next > A Sep 16 4:57

On January 1, 2024, Nichols Company acquired 80% of Smith Company's common stock and 40% of its non-voting, cumulative preferred stock. The consideration transferred by Nichols was $1,200,000 for the common and $124,000 for the preferred. There was no premium in the value of consideration transferred. Any excess acquisition-date fair value over book value is considered goodwill. The capital structure of Smith immediately prior to the acquisition is: Common stock, $10 par value (50,000 shares outstanding) Preferred stock, 6% cumulative, $100 par value, 3,000 shares outstanding Additional paid in capital Retained earnings Total stockholders' equity The consolidation entry at date of acquisition will include (referring to Smith): Multiple Choice O < Prev 9 of 20 $ 500,000 Debit Common stock $500,000, debit Preferred stock $120,000, and debit Additional paid-in capital $200,000. M ED 300,000 200,000 500,000 $ 1,500,000 Next > A Sep 16 4:57

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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