Mary Henderson invested $45,000 cash in the company in exchange for its common stock.
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Mary Henderson invested $45,000 cash in the company in exchange for its common stock.
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- To obtain all of the stock of Molly, Inc., Harrison Corporation issued its own common stock. Harrison had to pay $98,000 to lawyers, accountants, and a stock brokerage firm in connection with services rendered during the creation of this business combination. In addition, Harrison paid $56,000 in costs associated with the stock issuance. How will these two costs be recorded?Antoine, Becky, and Colleen form ABC Corporation by contributing the following items in exchange for stock in ABC Corporation: Adjusted Basis Fair Market Value of property given of property given Shares of Stock Received Antoine: Cash $ 30,000 $30,000 Equipment 300,000 420,000 4500 shares Becky: Land $100,000 $480,000 3000 shares* Mortgage 150,000 (150,000) Colleen: Services $0 $ 50,000 500 shares Additional information: Colleen has…Received $17000 cash investment from the business owners and distributed 1000 shares of common stock to them with a market price of $17 per share? which accounts are affected in this transactions?
- Ron, David, and Mary formed Widget, Inc. Ron and David each received 40% of the stock, and Mary received the remaining 20%. Ron contributed land with an FMV of $70,000 and an adjusted basis of $20,000. The corporation also assumed a $30,000 liability on the property. David contributed land with an FMV of $30,000 and an adjusted basis of $15,000. David also contributed $10,000 in cash. Mary received her stock for services rendered. She normally would bill $20,000 for these services. What is David's basis in the corporate stock received? a.$0 b.$10,000 c.$25,000 d.$40,000Joseph Johnson established JJ Inc. in 2013. When he established the corporation, he exchanged $10,000 cash for 100% of the common shares with a Paid-Up Capital amount of $10,000. Early in 2015, Joseph transferred additional assets to the corporation. The assets he transferred consisted of a car he has been using as his personal automobile with a fair market value of $14,890 (adjusted cost basis of $9,000) and cash in the amount of $8,000. In exchange for these assets, he received stock with a Paid-Up Capital amount of $34,000. What are the tax consequences to Joseph and to JJ Inc. of this 2015 transfer?Parch Inc. and Rees Urch, Parch's former head of R&D, formed Sede Inc., which will perform research and development. Sede issued 10,000 shares of common stock to Urch, who is now Sede's president. Parch lent $800,000 to Sede for initial working capital in return for a note receivable that can be converted at will into 100,000 shares of Sede's common stock. Parch also granted Sede a line of credit of $1,000,000. Is consolidation appropriate for Parch and Sede? Explain and justify your answer. What would Parch accomplish with this arrangement? If consolidation were not appropriate, what serious reporting issue exists regarding Parch's separate financial statements?