Pace Corporation acquired 100 percent of Spin Company's common stock on January 1, 20X9. Balance sheet data for the two companies immediately following the acquisition follows: Item Pace Corporation Spin Company Cash $ 30,000 $ 25,000 Accounts Receivable 80,000 40,000 Inventory 150,000 55,000 Land 65,000 40,000 Buildings and Equipment 260,000 160,000 Less: Accumulated Depreciation (120,000 ) (50,000 ) Investment in Spin Company Stock 150,000 Total Assets $ 615,000 $ 270,000 Accounts Payable $45,000 $33,000 Taxes Payable 20,000 8,000 Bonds Payable 200,000 100,000 Common Stock 50,000 20,000 Retained Earnings 300,000 109,000 Total Liabilities and Stockholders' Equity $ 615,000 $ 270,000 At the date of the business combination, the book values of Spin's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, and land, which had a fair value of $50,000. The fair value of land for Pace Corporation was estimated at $80,000 immediately prior to the acquisition. Based on the preceding information, at what amount should total land be reported in the consolidated balance sheet prepared immediately after the business combination? $115,000 $105,000 $130,000 $120,000

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 26

Pace Corporation acquired 100 percent of Spin Company's common stock on January 1, 20X9. Balance sheet data for the two companies immediately following the acquisition follows:

Item	Pace Corporation	Spin Company
Cash		$	30,000		$	25,000
Accounts Receivable			80,000			40,000
Inventory			150,000			55,000
Land			65,000			40,000
Buildings and Equipment			260,000			160,000
Less: Accumulated Depreciation			(120,000	)		(50,000	)
Investment in Spin Company Stock			150,000
Total Assets		$	615,000		$	270,000
Accounts Payable			$45,000			$33,000
Taxes Payable			20,000			8,000
Bonds Payable			200,000			100,000
Common Stock			50,000			20,000
Retained Earnings			300,000			109,000
Total Liabilities and Stockholders' Equity		$	615,000		$	270,000

At the date of the business combination, the book values of Spin's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, and land, which had a fair value of $50,000. The fair value of land for Pace Corporation was estimated at $80,000 immediately prior to the acquisition.

Based on the preceding information, at what amount should total land be reported in the consolidated balance sheet prepared immediately after the business combination?

		$115,000
		$105,000
		$130,000
		$120,000

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