McCoy Has the Following Account Balances as of December 31

question 29

Multiple Choice

McCoy has the following account balances as of December 31, 2020 before an acquisition transaction takes place. The fair value of McCoy's Land and Buildings are $650,000 and $600,000, respectively. On December 31, 2020, Ferguson Company issues 30,000 shares of its $10 par value ($30 fair value) common stock in exchange for all of the shares of McCoy's common stock. Ferguson paid $12,000 for costs to issue the new shares of stock. Before the acquisition, Ferguson has $800,000 in its common stock account and $350,000 in its additional paid-in capital account.On December 31, 2020, assuming that McCoy will retain its separate corporate existence, what value is assigned to Ferguson's investment account?

• A) $150,000.
• B) $300,000.
• C) $600,000.
• D) $900,000.
• E) $912,000.

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Definitions:

Carbonate Ester

An organic compound formed by the reaction of a carbonate ion with an alcohol, often used as solvents and intermediates in chemical synthesis.

Glass Transition Temperature

The temperature range over which a polymer changes from a hard, glassy state to a soft, rubbery state.

Polymer

A large molecule or macromolecule composed of many repeated subunits.

Major Organic Product

The primary product of a chemical reaction that is formed in the largest quantity compared to other products.