02 Jan 10. Based on the preceding
QUIZ CHAPTER 4; SPRING 2014
On December 31, 2012, Abengoa Corporation paid $782,000 for all of Enel Company’s outstanding common stock. On that date, the costs and fair values of Enel’s recorded assets and liabilities were as follows:
Cost
Fair Value
Cash & Receivables
$115,000
$115,000
Inventory
276,000
287,500
Buildings & Equipment, net
460,000
552,000
Liabilities
(230,000)
(230,000)
Net Assets
$621,000
$724,500
1. Based on the preceding information, the differential reflected in a consolidation worksheet to prepare a consolidated balance sheet immediately after the business combination is:
A. $0.
B. $57,500.
C. $161,000.
D. $103,500.
2. Based on the preceding information, what amount should be allocated to goodwill in the consolidated balance sheet, prepared after this business combination?
A. $0.
B. $57,500.
C. $161,000.
D. $103,500.
3. Metrovacesa Corporation acquired 100% of Pescanova Corporation’s outstanding capital stock for $430,000 cash. Immediately before the purchase, the balance sheets of both corporations reported the following:
Metrovacesa
Pescanova
Assets
$2,000,000
$750,000
Liabilities
$750,000
$400,000
Common Stock
1,000,000
310,000
Retained Earnings
250,000
40,000
Liabilities & Stockholder’s Equity
$2,000,000
$750,000
At the date of purchase, the fair value of Pescanova’s assets was $50,000 more than the aggregate carrying amounts. In the consolidated balance sheet prepared immediately after the purchase, the consolidated stockholder’s equity should amount to:
A. $1,680,000.
B. $1,650,000.
C. $1,600,000.
D. $1,250,000.
4. Consolidated financial statements are being prepared for a parent and its four subsidiaries that have intercompany loans of $100,000 and intercompany profits of $300,000. How much of these intercompany loans and profits should be eliminated?
A. Intercompany loans: $0 / Intercompany profits: $0.
B. Intercompany loans: $0 / Intercompany profits: $300,000.
C. Intercompany loans: $100,000 / Intercompany profits: $0.
D. Intercompany loans: $100,000 / Intercompany profits: $300,000.
Vocento Corporation acquired 100% of Zeltia Corporation’s common stock on January 1, 2013. Balance sheet data for the two companies immediately following the acquisition follow:
Item
Vocento Corporation
Zeltia Corpration
Cash
$49,000
$30,000
Accounts Receivable
110,000
45,000
Inventory
130,000
70,000
Land
80,000
25,000
Buildings & Equipment
500,000
400,000
Less: Accumulated Depreciation
(223,000)
(165,000)
Investment in Zeltia Corporation Stock
198,000
Total Assets
$844,000
$405,000
Accounts Payable
$61,500
$28,000
Taxes Payable
95,000
37,000
Bonds Payable
280,000
200,000
Common Stock
150,000
50,000
Retained Earnings
257,500
90,000
Total Liabilities & Stockholders’ Equity
$844,000
$405,000
At the date of the business combination, the book values of Zeltia’s net assets and liabilities approximated fair value except for inventory, which had a fair value of $85,000, and land, which had a fair value of $45,000.
5. Based on the preceding information, at what amount should total inventory be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $70,000
B. $130,000
C. $200,000
D. $215,000
6. Based on the preceding information, what amount of goodwill will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $0
B. $23,000
C. $43,000
D. $58,000
7. Based on the preceding information, what amount of total assets will appear in the consolidated balance sheet prepared immediately after the business combination?
A. $84,400
B. $1,051,000
C. $1,109,000
D. $1,249,000
8. Based on the preceding information, what amount of liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $265,000
B. $436,500
C. $701,500
D. $1,249,000
9. Based on the preceding information, what amount of retained earnings will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $547,500
B. $397,500
C. $347,500
D. $257,500
10. Based on the preceding information, what amount of total stockholder’s equity will be reported in the consolidated balance sheet prepared immediately after the business combination?
A. $407,500
B. $547,500
C. $844,000
D. $1,249,000
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