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On January 1, Year 6, Green Company acquired 100 percent of the outstanding common shares...

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Accounting

On January 1, Year 6, Green Company acquired 100 percent of the outstanding common shares of Blue Inc. by issuing 10,000 common shares. The carrying amounts and the fair values of both companies immediately before the acquisition were as follows:

Green Company Blue Inc.
Carrying amounts Fair values Carrying amounts Fair values
Assets $ 2,175,000 $ 2,400,000 $ 900,000 $ 1,042,500
Liabilities $ 1,155,000 1,132,000 $ 375,000 405,000
Common shares* 450,000 97,500
Retained earnings 570,000 427,500
$ 2,175,000 $ 900,000

*Immediately before the acquisition transaction, Green Company had 20,000 common shares outstanding and Blue Inc. had 6,500 common shares outstanding. Greens shares were actively trading at $75 on the date of the acquisition.

What amount would Green Company report on its consolidated financial statements for common shares immediately after the acquisition transaction?

Multiple Choice

  • $450,000

  • $547,500

  • $1,200,000

  • $1,297,500

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