Which of the following is a correct application of Marginal Analysis? a. You buying 4 pairs of shoes for $240 because you are wi
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Answer:
1. (4) Building at $180,000 and accumulated depreciation of $18,000.
2. (1) $312,000
3. (3) additional paid-in capital of $162,000.
Explanation:
1. The purchase price of building is $180,000
And the depreciation based on straight line method with a life of 30 years for each year = $180,000/30 = $6,000
Therefore, accumulated depreciation for 3 years = $6,000 3 = $18,000
2. Total amount of assets given to subsidiary shall be the cost, and value of investment in books = $100,000 of land + ($180,000 - $18,000) of building after depreciation + $50,000 cash given
Therefore total value of investment shall be $312,000
3. Additional paid in capital = Total value of investment - Cost of shares (par value of shares)
= $312,000 - ($10 15,000 shares) = $312,000 - $150,000
= $162,000