Question
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,
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 issued $400 in 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 $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows:
Moody Osorio
Cash 180 40
Receivables 810 180
Inventoriws 1080 280
Land 600 360
Buildings (net) 1260 440
Equipment (net) 480 100
Account Payable (450) (80)
Long-Term Liabilities (1290) (400)
Common stock (1$par) (330)
Common Stock($20 par) (240)
Additional paid-in capital (1080) (340)
RETAIN EARNINGS (1260) (340)
In Moody's appraisal of Osorio, three assets were deemed to be undervalued of the subsiduary's books: Inventory by $10. Land by $40 and Buildings by $60.
What ammount was recorded at the investment in Osorio???
a 930
b 820
c 800
d 835
e 815
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