P Company purchased 80% of the outstanding common stock of S Company on January 2, 2011, for $350,000. And any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of S Company's other assets and liabilities are equal to their fair values. Balance sheets for P Company and S Company immediately after the stock acquisition were as follows: P Company $ 166,000 S Company $ 80,000 Current assets Investment in S Company Plant and equipment (net) 350,000 -0- 560,000 224,000 40,000 $1,116,000 Land 120,000 $424,000 Total Current liabilities Long-term notes payable Common stock Other contributed capita Retained earnings $ 90,000 $ 28,000 -0- 46,000 480,000 150,000 244,000 302.000 $1,116,000 64,000 136.000 Total $424,000 The consolidated balance sheet for P and S Companies on the date of acquisition will include: * O Total Assets of $1,255,500 Total Liabilities and Equity of 1,310,000 Total Assets of $1,305,000 O Total Liabilities and Equity of $1,277,500 None of the options is correct
P Company purchased 80% of the outstanding common stock of S Company on January 2, 2011, for $350,000. And any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of S Company's other assets and liabilities are equal to their fair values. Balance sheets for P Company and S Company immediately after the stock acquisition were as follows: P Company $ 166,000 S Company $ 80,000 Current assets Investment in S Company Plant and equipment (net) 350,000 -0- 560,000 224,000 40,000 $1,116,000 Land 120,000 $424,000 Total Current liabilities Long-term notes payable Common stock Other contributed capita Retained earnings $ 90,000 $ 28,000 -0- 46,000 480,000 150,000 244,000 302.000 $1,116,000 64,000 136.000 Total $424,000 The consolidated balance sheet for P and S Companies on the date of acquisition will include: * O Total Assets of $1,255,500 Total Liabilities and Equity of 1,310,000 Total Assets of $1,305,000 O Total Liabilities and Equity of $1,277,500 None of the options is correct
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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P Company purchased 80% of the outstanding common stock of S Company on
January 2, 2011, for $350,000. And any difference between the value implied by
the purchase price of the investment and the book value of net assets acquired
relates to subsidiary land. The book values of S Company's other assets and
liabilities are equal to their fair values. Balance sheets for P Company and S
Company immediately after the stock acquisition were as follows:
P Company
$ 166,000
S Company
$ 80,000
Current assets
Investment in S Company
Plant and equipment (net)
350,000
560,000
-0-
224,000
Land
40,000
$1,116,000
120,000
Total
$424,000
Current liabilities
Long-term notes payable
Common stock
$ 90,000
$ 28,000
-0-
46,000
480,000
150,000
Other contributed capita
Retained earnings
244,000
64,000
302.000
$1,116,000
136.000
Total
$424,000
The consolidated balance sheet for P and S Companies on the date of acquisition
will include: *
O Total Assets of $1,255,500
O Total Liabilities and Equity of 1,310,000
O Total Assets of $1,305,000
O Total Liabilities and Equity of $1,277,500
O None of the options is correct
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