On January 1, 20X8, Chariot Company acquired 100 percent of Stryder Company for $220,000 cash. The trial balances for the two companies on December 31, 20X8, included the following amounts:

On the acquisition date, Stryder reported net assets with a book value of $170,000. A total of $10,000 of the acquisition price is applied to goodwill for 20X8. The difference between fair value and book value of tangible assets is related entirely to buildings and equipment. Chariot used the equity method in accounting for its investment in Stryder. Analysis of receivables and payables revealed that Stryder owed Chariot $10,000 on December 31, 20X8.

8. Based on the information provided, the differential associated with this acquisition is: A. $36,000. B. $40,000. C. $10,000. D. $50,000.

9. Based on the information provided, the beginning differential assigned to buildings and equipment is: A. $50,000. B. $40,000. C. $10,000. D. $36,000.

10. Based on the information provided, what amount of retained earnings will be reported in the consolidated financial statements for the year? A. $331,000 B. $110,000 C. $441,000 D. $456,000

11. Based on the information provided, what amount of total assets will be reported in the consolidated balance sheet for the year? A. $895,000 B. $801,000 C. $723,000 D. $1,111,000

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8. D) $50000

9. B) $ 40000

The beginning differential assigned to buildings and equipment is calculated as follows:

Cost incurred on purchase of Investment $ 220000

Less: Net Assets of Stryder (book Value) ($ 170000)

Less: Goodwill recognized on Purchase of Stryder ($ 10000)

Difference assigned to Building $ 40000

10. A) $331,000

11. C) $723,000

Chariot Company Debit Stryder Company Debit Credit Credit Cash Accounts Receivable Inventory Land Buildings and Ecuipment Investment in Stryder Company Cost of Goods Sold Depreciation Expense Other Expenses Dividends Declared Accumulated Depreciation Accounts Payable Mortgages Payable Common Stock Retained Earnings Sales Income from Subsidiary $50,000 60,000 75,000 60,000 300,000 256,000 270,000 30,000 80,000 40,000 $30,000 40,000 80,000 40,000 120,000 170,000 12,000 63,000 15,000 $120,000 50,000 100,000 200,000 200,000 500,000 51,000 $48,000 27,000 25,000 100,000 70,000 300,000 $1,221,000 S1,221,000 $570,000 $570,000