Reference no: EM131216801
During its inception, Devon Company purchased land for $100,000 and a building for $180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 30 years, with zero residual value. An appraisal revealed that the building has a fair value of $200,000.
1. Based on the information provided, at the time of the transfer, Regan Company should record:
(1) Building at $180,000 and no accumulated depreciation.
(2) Building at $162,000 and no accumulated depreciation.
(3) Building at $200,000 and accumulated depreciation of $24,000.
(4) Building at $180,000 and accumulated depreciation of $18,000.
2. Based on the information provided, what amount would be reported by Devon Company as investment in Regan Company common stock?
(1) $312,000
(2) $180,000
(3) $330,000
(4) $150,000
3. Based on the preceding information, Regan Company will report
(1) additional paid-in capital of $0.
(2) additional paid-in capital of $150,000.
(3) additional paid-in capital of $162,000.
(4) additional paid-in capital of $180,000.
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: During its inception, Devon Company purchased land for $100,000 and a building for $180,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 15,000 shares of Regan's..
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