Initial Value of Investment in Subsidiary Account
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The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2000, 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.
On May 1, 2000, what value is assigned to the investment account?
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Solution Summary
This solution illustrates what value to use to initially record the purchase of a subsidiary.
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Because the purchase method of accounting records the acquisition of a subsidiary at its fair ...
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