Potter Company purchased 100 percent of the voting common shares of Stately Corporation by issuing bonds with

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Potter Company purchased 100 percent of the voting common shares of Stately Corporation by issuing bonds with a par value and fair value of \(\$ 135,000\) to the existing shareholders of Stately. Immediately prior to the acquisition, Potter Company reported total assets of \(\$ 510,000\), liabilities of \(\$ 320,000\), and stockholders' equity of \(\$ 190,000\). At that date, Stately Corporation reported total assets of \(\$ 350,000\), liabilities of \(\$ 215,000\), and stockholders' equity of \(\$ 135,000\). Included in Stately's liabilities was an account payable to Potter Company in the amount of \(\$ 15,000\), which Potter included in its accounts receivable.

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Immediately after Potter Company purchased the shares of Stately:

a. What amount of total assets did Potter report in its balance sheet?

b. What amount of total assets was reported in the consolidated balance sheet?

c. What amount of total liabilities was reported in the consolidated balance sheet?

d. What amount of stockholders' equity was reported in the consolidated balance sheet?

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Advanced Financial Accounting

ISBN: 9780072444124

5th Edition

Authors: Richard E. Baker, Valdean C. Lembke, Thomas E. King

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