Question
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is
Precision Company acquires all of Springfield Company's voting stock for $5,000,000 in cash. Information on Springfield's assets and liabilities at the date of acquisition is as follows:
|
| Book Value Dr (Cr) | Fair Value Dr (Cr) |
| Current assets | $ 500,000 | $ 700,000 |
| Land, buildings and equipment (net) | 2,000,000 | 3,500,000 |
| Liabilities | (600,000) | (550,000) |
| Capital stock | (500,000) |
|
| Retained earnings | (1,400,000) |
|
In addition, Springfield Company has unrecorded identifiable intangible assets, in the form of brand names and lease agreements, with a total estimated fair value of $400,000. In eliminating entry (R) on the consolidation working paper, the credit to investment is:
| A. | $2,580,000 | |
| B. | $3,100,000 | |
| C. | $3,480,000 | |
| D. | $1,900,000 |
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Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
16th Edition
324376375, 0324375743I, 978-0324376371, 9780324375749, 978-0324312140
