Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and liabilities of Creative Instrument Ltd. (CIL). On the acquisition date, WRI's shares were trading at $22 per share. After the transaction, CIL owned 20% of WRI's outstanding shares. The following information relates to CIL on the acquisition date:
Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and liabilities of Creative Instrument Ltd. (CIL). On the acquisition date, WRI's shares were trading at $22 per share. After the transaction, CIL owned 20% of WRI's outstanding shares. The following information relates to CIL on the acquisition date:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and liabilities of Creative Instrument Ltd. (CIL). On the acquisition date, WRI's shares were trading at $22
per share. After the transaction, CIL owned 20% of WRI's outstanding shares. The following information relates to CIL on the acquisition date:
Cash
Accounts receivable
Inventory
Property, plant, and equipment (net)
Current liabilities
Long-term debt
Common shares
Retained earnings
WRI
S
$
S
75,000
180,000
220,000
880,000
1,355,000
75,000
235,000
100,000
945,000
$ 1,355,000
carrying value CIL
$ 35,000
67,500
carrying value
125,000
350,000
$ 577,500
$ 25,000
125,000
165,000
262,500
$ 577,500
CIL
fair value
$ 35,000
69,500
147,000
388,000
25,000
125,000
Based on the information provided, which of the amounts below correctly reflect amounts that would appear on WRI's statement of financial position?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff4690f1c-6d6c-4f71-b006-03852d7e9d2b%2F533a4a56-b015-4f5d-91ef-8ff5546a3293%2F5uhk58_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Wooden Reed Inc. (WRI) issued 30,000 voting common shares to acquire all of the assets and liabilities of Creative Instrument Ltd. (CIL). On the acquisition date, WRI's shares were trading at $22
per share. After the transaction, CIL owned 20% of WRI's outstanding shares. The following information relates to CIL on the acquisition date:
Cash
Accounts receivable
Inventory
Property, plant, and equipment (net)
Current liabilities
Long-term debt
Common shares
Retained earnings
WRI
S
$
S
75,000
180,000
220,000
880,000
1,355,000
75,000
235,000
100,000
945,000
$ 1,355,000
carrying value CIL
$ 35,000
67,500
carrying value
125,000
350,000
$ 577,500
$ 25,000
125,000
165,000
262,500
$ 577,500
CIL
fair value
$ 35,000
69,500
147,000
388,000
25,000
125,000
Based on the information provided, which of the amounts below correctly reflect amounts that would appear on WRI's statement of financial position?
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