[The Following Information Applies to the Questions Displayed Below

question 124

Multiple Choice

[The following information applies to the questions displayed below.]
On January 1,2018,Juniper Corporation issued 60,000 shares of its total 200,000 authorized shares of $4 par value common stock for $8 per share.On December 31,2018,Juniper Corporation's common stock is trading at $12 per share.
-Assuming Juniper Corporation did not issue any more common stock in 2018,how does the increase in value of its outstanding stock affect Juniper?

• A)Juniper should recognize additional net income for 2018 of $4 per share,or $240,000.
• B)Paid-in capital at December 31,2018,is $720,000 (i.e. ,60,000 shares times $12 per share).
• C)This increase in market value of outstanding stock is not recorded in the financial statements of Juniper Corporation.
• D)Each shareholder must pay an additional $4 per share to Jupiter.

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Definitions:

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the premium paid over the fair value of the net identifiable assets of the business.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, which may differ from its market value.

Acquisition

The process or act of acquiring or purchasing another company or asset.

Additional Paid-In Capital

Refers to the amount of money paid by investors for shares in a company above the par value of the shares.