Carnes Has the Following Account Balances as of May 1

question 9

Multiple Choice

Carnes has the following account balances as of May 1, 2012 before an acquisition transaction takes place. The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2012, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account.
What will be Riley's balance in its common stock account as a result of this acquisition?

• A) $300,000.
• B) $990,000.
• C) $1,000,000.
• D) $1,590,000.
• E) $1,600,000.

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