Question
On January 31, 2020, Combinor Company issued $900,000 face amount of 9%, 10-year bonds due January 31, 2030, with a present value of $965,423 at
On January 31, 2020, Combinor Company issued $900,000 face amount of 9%, 10-year bonds due January 31, 2030, with a present value of $965,423 at a 8% yield, to Combinee Company for its net assets. The journal entry for the merger includes:
a. Debit to discount on bonds payable $65,423.
b. Debit to premium on bonds payable $65,423.
c. Debit to investment in combinee net assets $965,423.
d. Debit to investment in combinee net assets $ 834,577.
The condensed separate and consolidated balance sheets of Parent Corporation and its subsidiary, on the date of their business combination showed inventories of parent, subsidiary and consolidated as: $400,000, $100,000 and $380,000 respectively.This means:
a. Excess of carrying amount of subsidiarys inventory over its fair value by $20,000.
b. Excess of fair value of parents inventory over its carrying amount by $20,000.
c. Excess of carrying amount of parents inventory over its fair value by $20,000.
d. Excess of fair value of subsidiarys inventory over its carrying amount by $20,000.
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