Smith Company Exchanges Assets to Acquire a Building

question 128

Multiple Choice

Smith Company exchanges assets to acquire a building.The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $250,000. Which of the following is correct for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for the building?

• A)Total assets increase $350,000.
• B)Stockholders' equity increases $250,000.
• C)Stockholders' equity increases $330,000.
• D)Total assets increase $330,000.

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