Stock Issuance Costs
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16. How are stock issuance costs and direct consolidation costs treated in a business combination which is accounted for as a purchase, when the subsidiary will retain its incorporation?
A) Stock issuance costs are a part of the acquisition costs, and the direct consolidation costs are a reduction to additional paid-in capital.
B) Direct consolidation costs are a part of the acquisition costs, and the stock issuance costs are a reduction to additional paid-in capital.
C) Both are treated as part of the acquisition price.
D) Both are treated as a reduction to additional paid-in capital.
E) Both are treated as a reduction to retained earnings.
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The solution discusses the stock issuance costs and direct consolidation costs.
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We have the following treatment for those 2 types of costs:
- Direct ...
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