value 2.00 polnts Note: Question 54 is a Kaplan CPA Review Question) Jay & Kay p

Question

value 2.00 polnts Note: Question 54 is a Kaplan CPA Review Question) Jay & Kay partnership's balance sheet at December 31, 20X1, reported the following Total assets Total liabilities Jay, capital Kay, capital $100,000 20,000 40,000 40,000 On January 2. 20X2, Jay and Kay dissolved their partnership and transferred all assets and liabilities to a newly-formed corporation. At the date of incorporation, the fair value of the net assets was $12,000 more than the carrying amount on the partnership's books, of which $7000 was assigned to tangible assets and $5,000 was assigned to goodwill. Jay and Kay were each issued 5,000 shares of the corporation's $1 par value common stock. Immediately following incorporation, additional paid-in capital in excess of par should be credited for $70,000 $68,000 O $82.000 O $77000

Explanation / Answer

Additional paid in capital in excess of par should be $82,000 which is calculated as follows:-

Fair value of Assets ($100,000+$12,000) $112,000 Less: Total Liabilities ($20,000) Net Assets $92,000 Less: Par Value of shares issued to both partners [(5,000+5,000)*$1] ($10,000) Additional Paid in capital in excess of par $82,000

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