1. Prior to being united in a business combination, Nunez Inc. and Miller Co. had the following stockholders equity figures:

Nunez Miller

Common Stock $270,000 $ 65,000

Retained Earnings $300,000 $110,000

Nunez issued 50,000 new shares of stock valued at $3 each to purchase 100% of the stock of Miller. Immediately after the acquisition closes, what are the consolidate balances to be reported for common stock and retained earnings, respectively?

1. $485,000 and $410,000

2. $420,000 and $300,000

3. $335,000 and $410,000

4. $270,000 and $300,000

2. Orange Inc. acquired 100% of Purple Co. on 1/1/14. At the date of acquisition, Purple had an asset account, Goodwill, with a value of $130,000. How will Purples goodwill be reported in the consolidation worksheet balance sheet at date of acquisition?

a. Added to goodwill created by Orange acquisition

b. Adjusted to a fair value of zero c. Reported as is at $100,000 d. None of above