Select the correct answer for each of the following questions.
Action Corporation issued nonvoting preferred stock with a fair market value of $4,000,000 in exchange for all the outstanding common stock of Master Corporation. On the date of the exchange, Master had tangible net assets with a book value of $2,000,000 and a fair value of $2,500,000. In addition, Action issued preferred stock valued at $400,000 to an individual as a finder's fee in arranging the transaction. As a result of this transaction, Action should record an increase in net assets of:
a. $2,000,000.
b. $2,500,000.
c. $4,000,000.
d. $4,400,000.
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