On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance
Question:
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance sheet information Venus just prior to the acquisition is given here:
Cash and Receivables | $35,000 |
Inventory | 75,000 |
Land | 100,000 |
Buildings and Equipment (net) | 220,000 |
Total Assets | $430,000 |
Accounts Payable | $65,000 |
Bonds Payable | 150,000 |
Common Stock | 100,000 |
Retained Earnings | 115,000 |
Total Liabilities and Stockholders’ Equity | $430,000 |
At the date of the business combination, Venus's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, land which had a fair value of $125,000, and buildings and equipment (net), which had a fair value of $250,000.
1. Based on the information provided, what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?
a. $60,000
b. $75,000
c. $15,000
d. $45,000
2. Based on the information provided, what amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition?
a. $30,000
b. $15,000
c. $85,000
d. $45,000
3. Based on the information provided, what amount will be included as investment in Venus Corporation in the consolidated balance sheet immediately following the acquisition?
a. $0
b. $395,000
c. $255,000
d. $300,000
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik