Rivendell Corporation and Foster Company merged as of January 1, 20X9. To effect the merger, Rivendell paid finder's fees of $40,000, legal fees of $13,000, audit fees related to the stock issuance of $10,000, stock registration fees of $5,000, and stock listing application fees of $4,000.Based on the preceding information, under the acquisition method:
A. $19,000 of stock issue costs are treated as a reduction in the paid-in capital.
B. $19,000 of stock issue costs are expensed.
C. $72,000 of stock issue costs are expensed.
D. $72,000 of stock issue costs are treated as goodwill.
Answer: A
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Babette Manufacturing produces plastic toys and uses process costing. There are three processing departments—Assembling, Finishing, and Packaging. On January 1, the Finishing Department had 2000 units of partially processed product in production. During January, 31,000 units were transferred in from the Assembling Department and 29,000 units were completed and transferred out. At the end of the month, 4000 units of partially processed products remained in the Finishing Department. The weighted- average method is used. See additional details below.
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