On January 1, 2018, Harrison Corporation spent $2,600,000 to acquire control over Involved, Inc. This price was based on paying $750,000 for 30 percent of Involved's preferred stock, and $1,850,000 for 80 percent of its outstanding common stock. As of the date of the acquisition, Involved's stockholders' equity accounts were as follows: Common stock, $10 par value, 100,000 shares outstanding$1,000,000 Preferred stock, 7% fully participating, $100 par value, 10,000 shares outstanding 1,000,000 Retained Earnings 2,000,000 Total stockholders' equity$4,000,000 ?What is the total acquisition-date fair value of Involved?
A. $2,600,000
B. $3,062,500
C. $3,250,000
D. $4,812,500
E. $2,312,500
Answer: D
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