On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Multiple Choice O O O O $400 Note: Parentheses indicate a credit balance. In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. If Osorio retains a separate corporate existence, what amount was recorded as the investment in Osorio? $440 $800 $1,030 Moody $ 180 810 $820 1,080 600 1,260 480 (450) (1,290) (330) (1,080) (1,260) Osorio $ 40 180 280 360 440 100 (80) (400) (240) (340) (340)
On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long- term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Cash Receivables Inventories Land Buildings (net) Equipment (net) Accounts payable Long-term liabilities. Common stock ($1 par) Common stock ($20 par) Additional paid-in capital Retained earnings Multiple Choice O O O O $400 Note: Parentheses indicate a credit balance. In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. If Osorio retains a separate corporate existence, what amount was recorded as the investment in Osorio? $440 $800 $1,030 Moody $ 180 810 $820 1,080 600 1,260 480 (450) (1,290) (330) (1,080) (1,260) Osorio $ 40 180 280 360 440 100 (80) (400) (240) (340) (340)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
6
Transcribed Image Text:On January 1, 2024, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-
term liabilities and also issued 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for
assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as
follows:
Cash
Receivables
Inventories
Land
Buildings (net)
Equipment (net)
Accounts payable
Long-term liabilities.
Common stock ($1 par)
Common stock ($20 par)
Additional paid-in capital
Retained earnings
Note: Parentheses indicate a credit balance.
Multiple Choice
O
()
O
$400
In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60.
If Osorio retains a separate corporate existence, what amount was recorded as the investment in Osorio?
$440
$800
$1,030
Moody
$ 180
810
$820
1,080
600
1,260
480
(450)
(1,290)
(330)
(1,080)
(1,260)
Osorio
$ 40
180
280
360
440
100
(80)
(400)
(240)
(340)
(340)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 1 images
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