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    Conservative Corporation established Spin Company as a wholly owned subsidiary to enter a new line of business. Conservative transferred assets and accounts payable worth $263,000 to Spin in exchange for Spin's common stock. Spin recorded this transaction by issuing 7,000 shares of $7 par value stock to Conservative.

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    Conservative Corporation established Spin Company as a wholly owned subsidiary to enter a new line of business. Conservative transferred assets and accounts payable worth $263,000 to Spin in exchange for Spin's common stock. Spin recorded this transaction by issuing 7,000 shares of $7 par value stock to Conservative.

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    4 views1 page

    ACCOUNTING

    Uploaded by

    Chryzbryth Lorenzo
    Conservative Corporation established Spin Company as a wholly owned subsidiary to enter a new line of business. Conservative transferred assets and accounts payable worth $263,000 to Spin in exchange for Spin's common stock. Spin recorded this transaction by issuing 7,000 shares of $7 par value stock to Conservative.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
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    of 1

    Chapter 01

    Intercorporate Acquisitions and Investments in Other Entities

    Multiple Choice Questions

    In order to reduce the risk associated with a new line of business, Conservative Corporation
    established Spin Company as a wholly owned subsidiary. It transferred assets and accounts
    payable to Spin in exchange for its common stock. Spin recorded the following entry when the
    transaction occurred:

    1. Based on the preceding information, what number of shares of $7 par value stock did Spin issue
    to Conservative? A. 10,000 B. 7,000 C. 8,000 D. 25,000

    2. Based on the preceding information, what was Conservative's book value of assets transferred
    to Spin Company? A. $243,000 B. $263,000 C. $221,000

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