Question

great corporation acquired a 90% interest in sos corporation at its $810,000 book value on december 31, 2013. a summary of the stockholders' equity for sos at the end of 2013 and 2014 is as follows: 12/31/13 12/31/14capital stock, $10 par $600,000 $600,000additional paid-in capital 30,000 30,000retained earnings 270,000 420,000total stockholders' equity $900,000 $1,050,000on january 1, 2015, sos sold 10,000 new shares of its $10 par value common stock for $45 per share. if sos sold the additional shares to the general public, great's investment in sos account after the sale would be . (use four decimal places.)

Answer 1

Great Corporation's investment in SOS Corporation after the sale of additional shares is $405,000.

Step-by-step explanation:

To calculate the investment in SOS Corporation by Great Corporation after the sale of additional shares, we need to consider the acquisition of the initial 90% interest and the subsequent sale of new shares.

The initial investment was made at book value, which was $810,000. This means that Great Corporation acquired 90% of SOS Corporation for $810,000.

After the sale of 10,000 new shares of common stock to the general public, we need to adjust the investment. Since Great Corporation owns 90% of SOS Corporation, it will still own 90% of the additional shares. So, the investment after the sale would be 90% of the total value of the new shares sold.

To calculate the total value of the new shares sold, we multiply the number of shares (10,000) by the sale price per share ($45). So, the total value of the new shares sold is $450,000.

Therefore, the investment in SOS Corporation by Great Corporation after the sale would be 90% of $450,000, which is $405,000.