Question

Kaplan Corp acquired Star, Inc on Jan 1, 2012. by issuing 13,000 shares of common stock with a 10/share par value and23 market value. This transaction resulted in recognizing 62,000 goodwill. Kaplan also agreed to compensate Star's former owners for any difference if Kaplan's stock is worth less thaN₂3 on Jan 1, 2013. Kaplan issues an additional 3,000 shares to Star's former owners to honor the contingent consideration agreement. What is true about this arrangement?

1) Kaplan issued 13,000 shares of common stock to acquire Star, Inc.
2) The par value of Kaplan's common stock is $10 per share.
3) The market value of Kaplan's common stock is $23 per share.
4) The transaction resulted in recognizing $62,000 goodwill.
5) Kaplan agreed to compensate Star's former owners if Kaplan's stock is worth less than $23 on Jan 1, 2013.
6) Kaplan issued an additional 3,000 shares to Star's former owners to honor the contingent consideration agreement.

Answer 1

The statements that are true about the arrangement between Kaplan Corp and Star, Inc are explained.

Step-by-step explanation:

The statements that are true about the arrangement between Kaplan Corp and Star, Inc are:

• Kaplan issued 13,000 shares of common stock to acquire Star, Inc.
• The par value of Kaplan's common stock is $10 per share.
• The market value of Kaplan's common stock is $23 per share.
• The transaction resulted in recognizing $62,000 goodwill.
• Kaplan agreed to compensate Star's former owners if Kaplan's stock is worth less than $23 on Jan 1, 2013.
• Kaplan issued an additional 3,000 shares to Star's former owners to honor the contingent consideration agreement.