Question
On January 1, 2019, Pirate Corp. acquired 80% of a Sea- Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest
On January 1, 2019, Pirate Corp. acquired 80% of a Sea- Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at that date was determined to be $40,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
Pirate Corp Sea Gull Corp
Cash 60,000 20,000
Accounts Receivable 80,000 30,000
Inventory 90,000 40,000
Land 100,000 40,000
Buildings and Equipment 200,000 150,000
Less: Accumulated Depreciation (80,000) (50,000)
Investment in Sea- Gull Corp 160,000
Total Assets 610,000 230,000
Accounts Payable 110,000 30,000
Bonds Payable 95,000 40,000
Common Stock 200,000 40,000
Retained Earnings 205,000 120,000
Total Liabilities and Equity 610,000 230,000
At the date of the business combination, the book values of Sea- Gull's net assets and liabilities approximated fair value except for inventory, which had a fair value of $45,000 and land, which had a fair value of $60,000.
1.)Based on the preceding information, what amount will be reported as total stockholder's equity in the consolidated balance sheet prepared immediately after the business combination? a. 205,000 b. 445,000 c. 550,000 d. 565,000
2.) What amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the combination?
a. 0 b.20,000 c.15,000 d. other: _______
3.) What amount of total land will be reported in the consolidated balance sheet prepeared immediately after the business combination?
a. 140,000 b. 60,000 c. 100,000 d. 160,000
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