Prior to being united in a business combination, Atkins, Inc, and Waterson Ccrpc

Question

Prior to being united in a business combination, Atkins, Inc, and Waterson Ccrpcration had the following stockholders' equity figures: Common stock (1 par value) hdditional paid-in 29,000 9 61,000 pointscapital 104,500 28,000 393,000 175,500 Retained earnings Atkins issues 62.500 new shares of its common stock valued at $4 per share for all of the outstanding stock of Waterson Immediately afterward, what are consolidated Addtional Pald-In Capital and Retained Earnings, respectively? Multple Choice $292.000 and $393000. $234,500 and $568,500. $132,500 and $568,500. $126,500 and $393000.

Explanation / Answer

Consolidated Additional Paid in capital:-

Additional Paid in capital of Atkins

104500

(+) Additional Paid in capital for new shares issued to Waterson

         (62500) * (4-1)

187500

Consolidated Additional Paid in capital

292000

Retained Earning remain the same after consolidation i.e 393000

Hence 1st option is correct

Additional Paid in capital of Atkins

104500

(+) Additional Paid in capital for new shares issued to Waterson

         (62500) * (4-1)

187500

Consolidated Additional Paid in capital

292000

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