McCoy Has the Following Account Balances as of December 31

question 102

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.What will the consolidated common stock account be as a result of this acquisition?

• A) $300,000.
• B) $800,000.
• C) $1,100,000.
• D) $1,400,000.
• E) $1,700,000.

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Definitions:

Consumer Bill of Rights

A set of principles and guarantees that protect consumers' rights in the marketplace, including the right to safety, to be informed, to choose, and to be heard.

Caveat Emptor

A Latin phrase meaning "let the buyer beware," indicating that the responsibility for due diligence on a purchase lies with the consumer.

Caveat Emptor

A principle in commerce that places the responsibility on the buyer to perform due diligence before making a purchase.

Principle

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