Question

Hoyt Corporation agreed to the following terms in order to acquire the net assets of Brown Company on January 1, 2011:

(1.) To issue 400 shares of common stock ($10 par) with a fair value of $45 per share.
(2.) To assume Brown's liabilities which have a fair value of $1,500.
On the date of acquisition, the consideration transferred for Hoyt's acquisition of Brown would be

Answer 1

The total consideration transferred by Hoyt Corporation to acquire Brown Company is $19,500, consisting of $18,000 from the issued common stock and $1,500 from the assumed liabilities.

Step-by-step explanation:

The consideration transferred for Hoyt Corporation's acquisition of Brown Company would be calculated by combining the fair value of the issued common stock plus the fair value of the liabilities assumed. To calculate the fair value of the common stock issued, we multiply the number of shares issued by the fair value per share: 400 shares × $45 per share, which equals $18,000. Adding the fair value of the assumed liabilities ($1,500), the total consideration transferred is $19,500.