When It Purchased Sutton, Inc

question 11

Multiple Choice

When it purchased Sutton, Inc. on January 1, 20X1, Pavin Corporation issued 500,000 shares of its $5 par voting common stock. On that date the fair value of those shares totaled $4,200,000. Related to the acquisition, Pavin had payments to the attorneys and accountants of $200,000, and stock issuance fees of $100,000. Immediately prior to the purchase, the equity sections of the two firms appeared as follows: Immediately after the purchase, the consolidated balance sheet should report paid-in capital in excess of par of

• A) $8,900,000
• B) $9,100,000
• C) $9,200,000
• D) $9,300,000

Understand the treatment of research and development costs and legal fees associated with patents.

Learn how to prepare a partial balance sheet for assets and account for transactions affecting shareholders' equity.

Understand the principles of calculating and recording depreciation expense using different methods.

Grasp the concept of book value and how it changes over the service life of an asset.

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Definitions:

Gender

Refers to the roles, behaviors, activities, and attributes that a given society considers appropriate for men and women.

Psychopathic Personality Inventory

A self-report scale intended to measure traits associated with psychopathy in non-clinical populations.

Behavioral Analogue Risk Task

A method used in psychological studies to measure an individual's propensity to take risks through simulated real-life situations.

Explanatory Variables

Variables in a statistical model that are thought to explain changes in the response variable.