Question
Halwell Motor Company acquires all of the stock of Ornex Auto Services for $60,000,000 in cash. The books of Ornex report the following account
Halwell Motor Company acquires all of the stock of Ornex Auto Services for $60,000,000 in cash. The books of Ornex report the following account balances at the date of acquisition (in trial balance format). Date-of-acquisition fair values are also displayed Fair Value Current assets Property, net Liabilities Capital stock Book Value Dr (Cr) Dr (Cr) $1,000,000 $650,000 59,000,000 40,000,000 (35,000,000) $(36,000,000) (10,000,000) Retained earnings (15,000,000) Total Orex has no previously unrecorded identifiable intangibles On the consolidation working paper, eliminating entry (R) Select one: a debits goodwill by $55,350,000 O b. credits Investment in Ornex by $25,000,000 0 c. debits capital stock by $10,000,000 O d. debits current assets by $350,000
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