What amount of inventory will be reported?

a. $70,000

b. $130,000

c. $200,000

d. $215,000 

Pocket Corporation acquired 100 percent of Strap Corporation’s common stock on December 31, 20X2. Balance sheet data for the two companies immediately following the acquisition follow:

At the date of the business combination, the book values of Strap’s net assets and liabilities approximated fair value except for inventory, which had a fair value of $85,000, and land, which had a fair value of $45,000.
Required

 Indicate the appropriate total that should appear in the consolidated balance sheet prepared immediately after the business combination.

Transcribed Image Text:

Item Cash Accounts Receivable. Inventory Land Buildings & Equipment Less: Accumulated Depreciation Investment in Strap Corporation Stock Total Assets Accounts Payable Pocket Corporation $ 49,000 Strap Corporation $ 30,000 110,000 45,000 130,000 70,000 80,000 25,000 500,000 400,000 (223,000) (165,000) 198,000 $844,000 $405,000 $ 61,500 $ 28,000 Taxes Payable 95,000 37,000 Bonds Payable 280,000 200,000 Common Stock 150,000 50,000 Retained Earnings 257,500 90,000 Total Liabilities & Stockholders' Equity $844,000 $405,000