On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition: On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach). Pfizer Corporation Vaxx Corporation Cash 60,000 20,000 Accounts receivable 80,000 30,000 Inventory 90,000 40,000 Land 100,000 40,000 Buildings and equipment 200,000 150,000 Less: Accumulated depreciation (80,000) (50,000) Investment in Vaxx Corp. stock 160,000 - Total Assets 610,000 230,000 Accounts payable 110,000 30,000 Bonds payable 95,000 40,000 Common stock 200,000 40,000 Retained earnings 205,000 120,000 Total Liabilities and Equity 610,000 230,000 What amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination? Group of answer choices 395,000 195,000 280,000 275,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 24E

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Question

On January 1, 2020, Pfizer Corp. acquired 80% of Vaxx Corp.’s common stock for P160,000 cash. The fair value of the non-controlling interest at the date was determined to be P40,000. Data from the balance sheets of the two companies included the following accounts as of the date of acquisition:

On the date of the business combination, the book values of Vaxx Corp’s net assets and liabilities approximated fair value except for inventory, which has a fair value of P45,000, and land, which had a fair value of P60,000. (using full goodwill approach).

	Pfizer Corporation	Vaxx Corporation
Cash	60,000	20,000
Accounts receivable	80,000	30,000
Inventory	90,000	40,000
Land	100,000	40,000
Buildings and equipment	200,000	150,000
Less: Accumulated depreciation	(80,000)	(50,000)
Investment in Vaxx Corp. stock	160,000	-
Total Assets	610,000	230,000

Accounts payable	110,000	30,000
Bonds payable	95,000	40,000
Common stock	200,000	40,000
Retained earnings	205,000	120,000
Total Liabilities and Equity	610,000	230,000