ACC-690

Module 6-2

Quiz

Question#10

On January 1,2013, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. to acquire these shares, Moody issues $400 long term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $ 10 per share. Moody paid $ 20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection withstock issuance costs. Prior to these transactions, the balance sheet for the two companies were as follows:

Moody Osorio

Cash$ 180 $ 40

Receivables 180 40

Inventories 810 180

Land 1,080 280

Building(net)1,260 440

Equipment(net) 480100

Account Payable (450) (80)

Long term liabilities (1,290) (400)

Common stock($ 1 par)(330)

Common stock($20 par)(240)

Additional Paid in capital (1080)(340)

Retained earnings(1260) (340)

Note: Parentheses indicate a credit balance.

In Moody appraisal of Osorio, three asset were deemed to be undervalued on the subsidiary's books: Inventory by $ 10, Land by $ 40, Building by $ 60.

Compute the amount of consolidated land at date of acquisition.

0 $ 320

0 $ 1,000

0 $ 400

0 $ 960

0 $ 920