Question

Assume that Wilkins issued 13,000 shares of common stock with a $5 par value and a $46 fair value for all of the outstanding shares of Granger. What will be the consolidated Additional Paid-In Capital and Retained Earnings (January 1, 2021 balances) as a result of this acquisition transaction

Answer 1

Answer: $593000; $250000

Step-by-step explanation:

The consolidated Additional Paid-In Capital and Retained Earnings (January 1, 2021 balances) as a result of this acquisition transaction will be calculated thus:

Additional paid in capital will be:

= $60000 + ([46-5] × $13000)

= $60000 + (41 × $13000)

= $60000 + $533000

=$593000

Retained earnings will the value of the parent's retained earnings only which will be $250000