Carnes Has the Following Account Balances as of May 1

question 83

Multiple Choice

Carnes has the following account balances as of May 1, 2010 before an acquisition transaction takes place. The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2010, 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. On May 1, 2010, what value is assigned to Riley's investment account?

• A) $150,000.
• B) $300,000.
• C) $750,000.
• D) $760,000.
• E) $1,350,000.

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Definitions:

Enforceable Agreement

A contract or agreement that is legally binding and can be upheld or compelled by law.

Title of Goods

A formal documentation or legal term indicating ownership rights over goods.

Express Contract

A contract explicitly stated by the parties, either orally or in writing, detailing the terms clearly.

Contract Formed

refers to the creation of a legally binding agreement that arises when an offer by one party is accepted by another party, meeting the necessary legal requirements.