On January 1, 2011, the Moody Company entered into a transaction for 100% of the...
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On January 1, 2011, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows:
Moody
Osorio
Cash
$180
$40
Receivables
810
180
Inventories
1,080
280
Land
600
360
Buildings (net)
1,260
440
Equipment (net)
480
100
Accounts payable
(450)
(80)
Long-term liabilities
(1,290)
(400)
Common stock ($1 par)
(330)
Common stock ($20 par)
(240)
Additional paid-in capital
(1,080)
(340)
Retained Earnings
(1,260)
(340)
In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60.
Compute the amount of consolidated additional paid-in capital at date of acquisition.
A. $1,080
B. $1,420
C. $1,065
D. $1,425
E. $1,440
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