McCoy Has the Following Account Balances as of December 31

question 120

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.At the date of acquisition, by how much does Ferguson's additional paid-in capital increase or decrease?

• A) $0.
• B) $588,000 increase.
• C) $600,000 increase.
• D) $612,000 increase.
• E) $900,000 decrease.

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