On January 1, 2013, Harrison Corporation Spent $2,600,000 to Acquire

Multiple Choice

On January 1, 2013, 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: $$\begin{array} { | l | r | } \hline \text { Common stock, } \$ 10 \text { par value, } 100,000 \text { shares outstanding } & \$ 1,000,000 \\\hline \text { Preferred stock, } \% \% \text { fully participating, } \$ 100 \text { par value, } & \\\hline 10,000 \text { shares outstanding } & 1,000,000 \\\hline \text { Retained Earnings } & 2,000,000 \\\hline \text { Total stockholders' equity } & \$ 4,000,000 \\\hline\end{array}$$ What is the total acquisition-date fair value of Involved?

A) $2,600,000
B) $4,812,500
C) $3,062,500
D) $2,312,500
E) $3,250,000