Question
On January 1, 2018, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zees acquisition-date fair values, Jay concluded that the
On January 1, 2018, Jay Company acquired all the outstanding ownership shares of Zee Company. In assessing Zees acquisition-date fair values, Jay concluded that the carrying value of Zees long-term debt (8-year remaining life) was less than its fair value by $19,200. At December 31, 2018, Zee Companys accounts show interest expense of $14,350 and long-term debt of $350,000. What amounts of interest expense and long-term debt should appear on the December 31, 2018, consolidated financial statements of Jay and its subsidiary Zee?
| Interest expense | Long-term debt | |
| a. | $16,750 | $369,200 |
| b. | $16,750 | $366,800 |
| c. | $11,950 | $369,200 |
| d. | $11,950 | $366,800 |
Multiple Choice
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Option A
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Option B
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Option C
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Option D
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Study Guide For Use With Managerial Accounting
Authors: Ronald M. Copeland, Paul E. Dascher, Jerry R. Strawser, Robert H. Strawser
1st Edition
0873937651, 978-0873937658
