On January 1, 2013, Harrison Corporation Spent $2,600,000 to Acquire

question 113

Multiple Choice

On January 1, 2013, Harrison Corporation spent $2,600,000 to acquire control over Involved, Inc. This price was based on paying $750,000 for 30 percent of Involved's preferred stock, and $1,850,000 for 80 percent of its outstanding common stock. As of the date of the acquisition, Involved's stockholders' equity accounts were as follows: What is the total acquisition-date fair value of Involved?

• A) $2,600,000
• B) $4,812,500
• C) $3,062,500
• D) $2,312,500
• E) $3,250,000

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Definitions:

Future Event

An occurrence or situation that has not yet happened but is expected or anticipated.

Accounts Payable

Liabilities of a business that are owed to creditors for goods and services purchased on credit.

Estimated

An approximate calculation or judgment regarding a number, value, or size based on available data, often used in planning and forecasting.

Liabilities

Economic responsibilities or liabilities that a business must pay back to others, requiring the disbursement of economic resources over a period.