On December 30, Draco, Inc. acquired a 100% ownership interest in Lamya Corporation at a cost of $300,000. Draco determined that Lamya’s inventory was undervalued by $20,000 on the acquisition date. Draco had retained earnings totaling $215,000, common stock totaling $60,000, total assets of $600,000, and total liabilities of $325,000 just before the consolidation. Lamya’s book value and fair market value of net assets were both $250,000 at the time of acquisition, with $50,000 reported as common stock and $200,000 reported as retained earnings. How much will Draco report as total stockholders' equity on its consolidated balance sheet immediately after the acquisition? Select one: A. $525,000 B. $285,000 C. $275,000 D. $575,000
On December 30, Draco, Inc. acquired a 100% ownership interest in Lamya Corporation at a cost of $300,000. Draco determined that Lamya’s inventory was undervalued by $20,000 on the acquisition date. Draco had retained earnings totaling $215,000, common stock totaling $60,000, total assets of $600,000, and total liabilities of $325,000 just before the consolidation. Lamya’s book value and fair market value of net assets were both $250,000 at the time of acquisition, with $50,000 reported as common stock and $200,000 reported as retained earnings. How much will Draco report as total stockholders' equity on its consolidated balance sheet immediately after the acquisition? Select one: A. $525,000 B. $285,000 C. $275,000 D. $575,000
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter8: Investing Activities
Section: Chapter Questions
Problem 22PC
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On December 30, Draco, Inc. acquired a 100% ownership interest in Lamya Corporation at a cost of $300,000. Draco determined that Lamya’s inventory was undervalued by $20,000 on the acquisition date. Draco had retained earnings totaling $215,000, common stock totaling $60,000, total assets of $600,000, and total liabilities of $325,000 just before the consolidation. Lamya’s book value and fair market value of net assets were both $250,000 at the time of acquisition, with $50,000 reported as common stock and $200,000 reported as retained earnings.
How much will Draco report as totalstockholders' equity on its consolidated balance sheet immediately after the acquisition?
How much will Draco report as total
Select one:
A. $525,000
B. $285,000
C. $275,000
D. $575,000
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