On January 1, Year 6, Green Company acquired 100 percent of the outstanding common shares...
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Accounting
On January 1, Year 6, Green Company acquired 100 percent of the outstanding common shares of Blue Inc. by issuing 10,000 common shares. The carrying amounts and the fair values of both companies immediately before the acquisition were as follows:
Green Company
Blue Inc.
Carrying amounts
Fair values
Carrying amounts
Fair values
Assets
$
2,175,000
$
2,400,000
$
900,000
$
1,042,500
Liabilities
$
1,155,000
1,132,000
$
375,000
405,000
Common shares*
450,000
97,500
Retained earnings
570,000
427,500
$
2,175,000
$
900,000
*Immediately before the acquisition transaction, Green Company had 20,000 common shares outstanding and Blue Inc. had 6,500 common shares outstanding. Greens shares were actively trading at $75 on the date of the acquisition.
What amount would Green Company report on its consolidated financial statements for common shares immediately after the acquisition transaction?
Multiple Choice
$450,000
$547,500
$1,200,000
$1,297,500
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