Chapter 1, Problem 1.3.2E

Multiple-Choice Questions on Reported Balances [AICPA Adapted]
Select the correct answer for each of the following questions.

2. On January 1, 20X1, Portland Corporation issued 10,000 shares of common stock in exchangefor all of Stockton Corporation’s outstanding stock. Condensed balance sheets of Portlandand Stockton immediately before the combination follow:

Portland’s common stock had a market price of $60 per share on January 1, 20X1. The marketprice of Stockton’s stock was not readily determinable. The fair value of Stockton’s net identifiable assets was determined to be $570,000. Portland’s investmentin Stockton’s stock will bestated in Portland’s balance sheet immediately after the combination in the amount of
a. $350,000.
b. $500,000.
c. $570,000.
d. $600,000.