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Q: 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

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. Required information

Based on the information provided, what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?

$60,000

$75,000

$15,000

$45,000

2. Required information

Based on the information provided, what amount of goodwill will be included in the consolidated balance sheet immediately following the acquisition?

$30,000

$15,000

$85,000

$45,000

3. Required information

Based on the information provided, what amount will be included as investment in Venus Corporation in the consolidated balance sheet immediately following the acquisition?

$0

$395,000

$255,000

$300,000

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