Answered: counts Payable $ 40,000 Inventory…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Statue Corporation’s balance sheet at January 1, 20X7, reflected the following balances:

Assets		Liabilities & Stockholders’ Equity
Cash & Receivables	$ 80,000	Accounts Payable	$ 40,000
Inventory	120,000	Income Taxes Payable	60,000
Land	70,000	Bonds Payable	200,000
Buildings & Equipment (net)	480,000	Common Stock	250,000
		Retained Earnings	200,000
Total Assets	$ 750,000	Total Liabilities & Stockholders’ Equity	$ 750,000

Prize Corporation entered into an active acquisition program and acquired 80 percent of Statue's common stock on January 2, 20X7, for $470,000. The fair value of the noncontrolling interest at that date was determined to be $117,500. A careful review of the fair value of Statue's assets and liabilities indicated the following:

	Book Value	Fair Value
Inventory	$ 120,000	$ 140,000
Land	70,000	60,000
Buildings & Equipment (net)	480,000	550,000

Goodwill is assigned proportionately to Prize and the noncontrolling shareholders.

Required:

Compute the appropriate amount related to Statue to be included in the consolidated balance sheet immediately following the acquisition for each of the following items:

Amounts

a. Inventory

b. Land

c. Buildings and equipment (net)

d. Goodwill

e.investment in Statue Corporation

f. Noncontrolling Interest

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