Reference no: EM132508673

On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:

                                                          Pumpkin               Spice

Cash                                         $50,000                $15,000

Accounts Receivable                     70,000                 25,000

Inventory                                   30,000                       20,000

Land                                            150,000                      80,000

Buildings and Equipment                     250,000                      200,000

Less: Accumulated Depreciation         (70,000)                       (20,000)

Investment in Spice Co.                        210,000

Total Assets                                     $690,000                     $320,000

Accounts Payable                                   $40,000                           $10,000

Bonds Payable                                        150,000                         40,000

Common Stock                                          300,000                        90,000

Retained Earnings                                     200,000                         180,000

Total Liabilities and Equity                              $690,000                    $320,000

• At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000.

Question 1: Based on the preceding information, what amount of total inventory will be reported in the consolidated balance sheet prepared immediately after the business combination?

A $20,000

B $30,000

C $50,000

D $60,000