Amazon acquired 100 percent of Ferries for P275,000. At the date of acquisition, Ferries had the following book and market values: (see information below) What is the amount of the “Investment in Ferries” account on Amazon’s financial records at the acquisition date? Book valueMarket valueCash and Receivables90,00090,000Inventory100,000100,000Plant assets (net)220,000300,000Current liabilities(45,000)(45,000)Long-term debt(114,000)(114,000)Common stock(10,000) Retained earnings(170,000)

Acquiring company should record assets and liabilities at market value as 'Investment in Subsidiary…

Answered: Amazon acquired 100 percent of Ferries…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 30E

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Amazon acquired 100 percent of Ferries for P275,000. At the date of acquisition, Ferries had the following book and market values: (see information below) What is the amount of the “Investment in Ferries” account on Amazon’s financial records at the acquisition date?

	Book value	Market value
Cash and Receivables	90,000	90,000
Inventory	100,000	100,000
Plant assets (net)	220,000	300,000
Current liabilities	(45,000)	(45,000)
Long-term debt	(114,000)	(114,000)
Common stock	(10,000)
Retained earnings	(170,000)

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