Question
On January 1, 20X9, Gulliver Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash. The fair value of the noncontrolling interest at
On January 1, 20X9, Gulliver Corporation acquired 80 percent of 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:
| Gulliver 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.
13. Based on the preceding information, what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination? A. $445,000 B. $205,000 C. $565,000 D. $550,000
pls explain why, thank you!
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