Carnes has the following account balances as of December 31, 2017 before an acquisition transaction takes...
Carnes has the following account balances as of December 31, 2017 before an acquisition transaction takes place.
| Inventory | $100,000 |
| Land | 400,000 |
| Buildings (net) | 500,000 |
| Common stock ($10 par) | 600,000 |
| Additional paid-in capital | 200,000 |
| Retained earnings | 200,000 |
| Revenues | 450,000 |
| Expenses | 250,000 |
The fair value of Carnes’ Land and Buildings are $650,000 and $550,000, respectively. On December 31, 2017, 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.
At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?
Multiple Choice
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$0.
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$440,000 increase.
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$450,000 increase.
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$640,000 increase.
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$650,000 decrease.
Homework Answers
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Carnes has the
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