Company A is about to acquire 100% of company B. Company B has identifiable net assets with book value of $300,000 and $500,000 respectively. As payment Company A will issue common stock with a fair value of $75,000. How should the transaction be recorded if the acquisition is? a) An acquisition of net assets? b) An acquisition of Company B’s common stock and Company B remains a separate legal entity
Company A is about to acquire 100% of company B. Company B has identifiable net assets with book value of $300,000 and $500,000 respectively. As payment Company A will issue common stock with a fair value of $75,000. How should the transaction be recorded if the acquisition is? a) An acquisition of net assets? b) An acquisition of Company B’s common stock and Company B remains a separate legal entity
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 30E
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Acquisition of Company B by Company A (stock or asset acquisition)
Company A is about to acquire 100% of company B. Company B has identifiable net assets with book value of $300,000 and $500,000 respectively. As payment Company A will issue common stock with a fair value of $75,000.
How should the transaction be recorded if the acquisition is?
a) An acquisition of net assets?
b) An acquisition of Company B’s common stock and Company B remains a separate legal entity
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