Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2020. To obtain these shares, Flynn pays $400,000 and issues 10,000 shares of $20 par value common stock on this date. Flynn's stock had a fair market value of $36 per share on that date. Flynn also pays $15,000 to a local investment firm for arranging the acquisition. An additional $10,000 was paid by Flynn in stock issuance costs. The book values for both Flynn and Macek as of January 1, 2020 follow. The fair market value of each of Flynn and Macek accounts is also included. In addition, Macek holds a fully amortized trademark that still retains a $40,000 value. The figures below are in thousands. Cash Receivables Inventory Land Buildings (net) Equipment Accounts payable Flynn, Inc. $ 900 480 660 300 1,200 360 480 1,140 1,200 1,080 Macck Company Book Value S 80 180 260 120 220 100 60 340 80 480 Fair Market Value S 80 160 300 130 280 75 60 300 Long-term liabilities Common stock Retained earnings Assume that this combination is accounted for using the purchase method. What amount will be reported for consolidated long-term liabilities? O $1,480. O $1,440. O $1,180. O $1,100. O $1,520.
Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2020. To obtain these shares, Flynn pays $400,000 and issues 10,000 shares of $20 par value common stock on this date. Flynn's stock had a fair market value of $36 per share on that date. Flynn also pays $15,000 to a local investment firm for arranging the acquisition. An additional $10,000 was paid by Flynn in stock issuance costs. The book values for both Flynn and Macek as of January 1, 2020 follow. The fair market value of each of Flynn and Macek accounts is also included. In addition, Macek holds a fully amortized trademark that still retains a $40,000 value. The figures below are in thousands. Cash Receivables Inventory Land Buildings (net) Equipment Accounts payable Flynn, Inc. $ 900 480 660 300 1,200 360 480 1,140 1,200 1,080 Macck Company Book Value S 80 180 260 120 220 100 60 340 80 480 Fair Market Value S 80 160 300 130 280 75 60 300 Long-term liabilities Common stock Retained earnings Assume that this combination is accounted for using the purchase method. What amount will be reported for consolidated long-term liabilities? O $1,480. O $1,440. O $1,180. O $1,100. O $1,520.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please help solve
Transcribed Image Text:Flynn acquires 100 percent of the outstanding voting shares of Macek Company on January 1, 2020. To obtain these shares, Flynn pays $400,000 and issues 10,000 shares of $20 par value common stock on this date. Flynn's stock
had a fair market value of $36 per share on that date. Flynn also pays $15,000 to a local investment firm for arranging the acquisition. An additional $10,000 was paid by Flynn in stock issuance costs.
The book values for both Flynn and Macek as of January 1, 2020 follow. The fair market value of each of Flynn and Macek accounts is also included. In addition, Macek holds a fully amortized trademark that still retains a $40,000
value. The figures below are in thousands.
Flynn, Inc.
$ 900
480
660
300
1,200
360
480
Macck Company
1,140
1,200
1,080
Book Value
S 80
180
260
120
220
100
60
340
80
480
Cash
Receivables
Inventory
Land
Buildings (net)
Equipment
Accounts payable
Long-term liabilities
Common stock
Retained earnings
Assume that this combination is accounted for using the purchase method. What amount will be reported for consolidated long-term liabilities?
O $1,480.
O $1,440.
O $1,180.
O $1,100.
O $1,520.
Fair Market Value
S 80
160
300
130
280
75
60
300
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education