Reference no: EM132040222
Use the following information to answer questions.
On January 1, 2005, Finch Corporation purchased 75% of the common stock of Grass Co. Separate balance sheet data for the companies at the combination date are given below:
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Finch
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Grass
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Cash
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$
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24,000
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$
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206,000
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Accounts Receivable
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144,000
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26,000
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Inventory
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132,000
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38,000
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Land
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68,000
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32,000
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Plant assets
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700,000
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300,000
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Accum. Depreciation
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(
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240,000
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)
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(
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60,000
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)
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Investment in Lapp
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392,000
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Total assets
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$
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1,230,000
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$
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542,000
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Accounts payable
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$
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206,000
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$
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142,000
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Capital stock
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800,000
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300,000
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Retained earnings
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224,000
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100,000
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Total liabilities & equities
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$
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1,230,000
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$
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542,000
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At the date of combination, the book values of Grass's net assets were equal to the fair value except for Grass's inventory, which had a fair value of $60,000.
Determine below what the consolidated balance would be for each of the requested accounts.
1. What amount of Inventory will be reported?
a.$170,000.
b. $169,000.
c.$186,500.
d.$192,000.
2.What amount of Goodwill will be reported?
a.$10,500.
b.$20,000.
c.$42,000.
d.$75,500.
3.What amount of total liabilities will be reported?
a.$206,000.
b.$261,000.
c.$302,500.
d.$348,000.
4.What is the reported amount for the minority interest?
a.$ 69,333.
b.$100,000.
c.$130,666.
d.$150,000.
5.What is the amount of consolidated Retained Earnings?
a.$224,000.
b.$299,000.
c.$324,000.
d.$346,666.
6.What is the amount of total assets?
a.$1,244,500.
b.$1,380,000.
c.$1,472,000.
d.$1,762,000.
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