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.

---

Definitions:

Sprain

An injury to ligaments caused by being stretched beyond their normal capacity and possibly torn.

Osteoporosis

A condition characterized by weakened bones that are more prone to fracture due to a decrease in bone density and quality.

Rheumatoid Arthritis

A chronic autoimmune disorder that primarily affects joints, leading to inflammation, pain, and eventually joint damage and deformity.

Bone Remodeling

The continuous turnover process of bone tissue that involves bone formation and resorption.