On January 1, 20X9, Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at that date was determined to be $40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Pirate Corp. Sea-Gull Corp. Cash $ 60,000 $ 20,000 Accounts Receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and Equipment 200,000 150,000 Less: Accumulated Depreciation (80,000 ) (50,000 ) Investment in Sea-Gull Corp. 160,000 Total Assets $ 610,000 $ 230,000 Accounts Payable $ 110,000 $ 30,000 Bonds Payable 95,000 40,000 Common Stock 200,000 40,000 Retained Earnings 205,000 120,000 Total Liabilities and Equity $ 610,000 $ 230,000 At the date of the business combination, the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory, which had a fair value of $45,000, and land, which had a fair value of $60,000. Based on the preceding information, what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination? $45,000 $135,000 $130,000 $90,000

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 17

On January 1, 20X9, Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at that date was determined to be $40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

	Pirate Corp.	Sea-Gull Corp.
Cash		$	60,000		$	20,000
Accounts Receivable			80,000			30,000
Inventory			90,000			40,000
Land			100,000			40,000
Buildings and Equipment			200,000			150,000
Less: Accumulated Depreciation			(80,000	)		(50,000	)
Investment in Sea-Gull Corp.			160,000
Total Assets		$	610,000		$	230,000

Accounts Payable		$	110,000		$	30,000
Bonds Payable			95,000			40,000
Common Stock			200,000			40,000
Retained Earnings			205,000			120,000
Total Liabilities and Equity		$	610,000		$	230,000

At the date of the business combination, the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory, which had a fair value of $45,000, and land, which had a fair value of $60,000.

Based on the preceding information, what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?

		$45,000
		$135,000
		$130,000
		$90,000

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