Company A purchased 100% of the outstanding common stock of Company B for $500,000 cash, and Company A incurred $50,000 in indirect acquisition costs. The FMV of the net assets of Company B was $400,000, and the BV of the net assets of Company B was $300,000. When Company A performs an initial consolidation, the remaining consolidated balance in Investment in Company B post-consolidation will be:

Question 6 options:

a)

$50,000

b)

$500,000

c)

$100,000

d)

$0

Company P purchased 100% of the outstanding common stock of Company S on 1/1/20 for $600,000 in cash and stock. Company P accounts for the income of Company S using the Cost Method, and during the year Company S reported Net Income of $100,000 and declared and paid dividends of $60,000. Assuming no other transaction between the two companies, the balance in the Investment Income from Company S on the books of Company P on 12/31/20 will be:

Question 9 options:

a)

$100,000

b)

$0

c)

$60,000

d)

$40,000