Explain why.

Basic Consolidations. For the next six questions, the balance sheets for Benton Corporation and Marbury Company on December 31, 20x8, show:

	Benton	Marbury
Cash and Receivables	$ 400,000	$240,000
Inventory	720,000	320,000
Land	110,000	60,000
Equipment (net)	510,000	160,000
Investment in S	410,000	--
Goodwill	________	________
Total	$2,150,000	$780,000
Current Payables	$ 140,000	$ 60,000
Long-term Payables	420,000	320,000
Common Stock	600,000	200,000
Retained Earnings	990,000	200,000
Noncontrolling Interest	________	________
Total	$2,150,000	$780,000

Benton Corporation acquires 75 percent ownership of Marbury Company on December 31, 20x8. The FMV of Benton's depreciable assets is $600,000 and the fair value of Marbury's depreciable assets is $280,000. Marbury owed Benton $20,000 on account at the date of combination.

Be sure to eliminate the intercompany receivables and payables. This entails reducing both receivables and payables by the intercompany amount.

2. What amount of depreciable assets will be reported in a consolidated balance sheet prepared immediately following the combination?

a. $670,000.

b. $720,000.

c. $760,000.

d. $790,000.

e. None of the above.

D

3. What amount will be reported for retained earnings in a consolidated balance sheet prepared immediately following the combination?

a. $990,000.

b. $1,140,000.

c. $1,190,000.

d. $1,400,000.

e. None of the above.

A

4. What amount of goodwill will be reported in a consolidated balance sheet prepared immediately following the combination?

a. $0.

b. $(15,000).

c. $ 20,000.

d. $26,667.

e. None of the above.

D

5. What amount of total assets will be reported in a consolidated balance sheet prepared immediately following the combination?

a. $2,610,000.

b. $2,646,667.

c. $2,660, 667.

d. $2,930,000.

e. None of the above.

B

6. What amount of total liabilities will be reported in a consolidated balance sheet prepared immediately following the combination?

a. $825,000.

b. $845,000.

c. $920,000.

d. $940,000.

e. None of the above.

C

7. At what amount will the noncontrolling interest be reported in a consolidated balance sheet prepared immediately following the combination?

a. $126,667.

b. $129,667.

c. $136,667.

d. $146,667.

e. None of the above.

C

The allocation of excess is:

				Mkt Value		$546,667
				M's BV		400,000
				Difference		$146,667
				Equipment				Goodwill
				$120,000				26,667

	Benton	Marbury	DR	CR	Consolid
Cash and receivables	$ 400,000	$240,000		$20,000	$620,000
Inventory	720,000	320,000			1,040,000
Land	110,000	60,000			170,000
Equipment (net)	510,000	160,000	120,000		790,000
Investment in S	410,000	--		410,000
Goodwill			26,667		26,667
Total	$2,150,000	$780,000			$2,646,667
Current Payables	$ 140,000	$ 60,000	$20,000		$180,000
Long-term Payables	420,000	320,000			740,000
Common Stock	600,000	200,000	200,000		600,000
Retained Earnings	990,000	200,000	200.000		990,000
Noncontrolling Interest				136,667	136,667
Total	$2,150,000	$780,000			$2,646,667