Question - On December 31, 1988, Saxe Corporation was merged into Poe Corporation. In the business combination, Poe issued 200,000 shares of its $10 par common stock, with a market price of $18 a share, for all of Saxe's common stock. The stockholders' equity section of each company's balance sheet immediately before the combination was:
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Poe
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Saxe
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Common Stock
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$3,000,000
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$1,500,000
|
|
Additional Paid-In Capital
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$1,300,000
|
$150,000
|
|
Retained Earnings
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$2,500,000
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$850,000
|
|
$6,800,000
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$2,500,000
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Assume that the merger is accounted for using the acquisition method of accounting. December 31, 1988 additional paid-in capital should be reported at:
$950,000
$1,450,000
$2,900,000
$1,300,000