Question

On December 1, 2021, Coronado Industries exchanged 48000 shares of its $10 par value common stock held in treasury for a used machine. The treasury shares were acquired by Coronado at a cost of $45 per share, and are accounted for under the cost method. On the date of the exchange, the common stock had a fair value of $60 per share (the shares were originally issued at $35 per share). As a result of this exchange, Coronado's total stockholders' equity will increase by

Answer 1

$2,880,000

Step-by-step explanation:

Calculation to determine what Coronado's total stockholders' equity will increase by

Increase in total stockholders' equity =[(48000*45)-(48000 * (60-45))]

Increase in total stockholders' equity =$2,160,000+$720,000

Increase in total stockholders' equity =$2,880,000

Therefore the total stockholders' equity will increase by $2,880,000