Carnes has the following account balances as of May 1, 2010 before an acquisition transaction takes place.
The fair value of Carnes' Land and Buildings are $650,000 and $550,000, respectively. On May 1, 2010, Riley Company issues 30,000 shares of its $10 par value ($25 fair value) common stock in exchange for all of the shares of Carnes' common stock. Riley paid $10,000 for costs to issue the new shares of stock. Before the acquisition, Riley has $700,000 in its common stock account and $300,000 in its additional paid-in capital account.
On May 1, 2010, what value is assigned to Riley's investment account?
A. $150,000.
B. $300,000.
C. $750,000.
D. $760,000.
E. $1,350,000.
At the date of acquisition, by how much does Riley's additional paid-in capital increase or decrease?
A. $0.
B. $440,000 increase.
C. $450,000 increase.
D. $640,000 increase.
E. $650,000 decrease