P Company purchased 80% of the outstanding common stock of S Company on January 2, 2011, for $350,000. And any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of S Company's other assets and liabilities are equal to their fair values. Balance sheets for P Company and S Company immediately after the stock acquisition were as follows: P Company $ 166,000 S Company $ 80,000 Current assets Investment in S Company Plant and equipment (net) 350,000 -0- 560,000 224,000 40,000 $1,116,000 Land 120,000 $424,000 Total Current liabilities Long-term notes payable Common stock Other contributed capita Retained earnings $ 90,000 $ 28,000 -0- 46,000 480,000 150,000 244,000 302.000 $1,116,000 64,000 136.000 Total $424,000 The consolidated balance sheet for P and S Companies on the date of acquisition will include: * O Total Assets of $1,255,500 Total Liabilities and Equity of 1,310,000 Total Assets of $1,305,000 O Total Liabilities and Equity of $1,277,500 None of the options is correct

P Company purchased 80% of the outstanding common stock of S Company on January 2, 2011, for $350,000. And any difference between the value implied by the purchase price of the investment and the book value of net assets acquired relates to subsidiary land. The book values of S Company's other assets and liabilities are equal to their fair values. Balance sheets for P Company and S Company immediately after the stock acquisition were as follows: P Company $ 166,000 S Company $ 80,000 Current assets Investment in S Company Plant and equipment (net) 350,000 -0- 560,000 224,000 40,000 $1,116,000 Land 120,000 $424,000 Total Current liabilities Long-term notes payable Common stock Other contributed capita Retained earnings $ 90,000 $ 28,000 -0- 46,000 480,000 150,000 244,000 302.000 $1,116,000 64,000 136.000 Total $424,000 The consolidated balance sheet for P and S Companies on the date of acquisition will include: * O Total Assets of $1,255,500 Total Liabilities and Equity of 1,310,000 Total Assets of $1,305,000 O Total Liabilities and Equity of $1,277,500 None of the options is correct

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 23E

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