Question Details

(Solution Download) Question 1: A 100% asset acquisition of Sub Company by Parent Company (using cash and a bond issue)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 1:A 100% asset acquisition of Sub Company by

 

Parent Company (using cash and a bond issue) would most likely

 

require which of the following?

a)Minority Interest
b)CR - Inventory $105,000
c)CR - Common Stock $100,000
d)None of the above

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Parent Company

 

Balance Sheet

Sub Company Balance Sheet
Assets, Liabilities & EquitiesBook ValueAssets, Liabilities & EquitiesBook ValueFair Value
Cash$250,000Cash$40,000$40,000
AR$30,000AR$15,000$10,000
Inventory$150,000Inventory$105,000$200,000
Land$100,000Land$60,000$100,000
Plant and Equipment$600,000Plant and Equipment$400,000$300,000
Less: Accumulated Depreciation-$150,000Less: Accumulated Depreciation-$150,000
    Total Assets$980,000    Total Assets$470,000$650,000
AP$20,000AP$50,000$50,000
Common Stock$100,000Common Stock$100,000
Additional Paid In Capital$560,000Additional Paid In Capital$60,000
Retained Earnings$300,000Retained Earnings$270,000
    Total Liabilities &

 

Equity

$980,000    Total Liabilities & Equity$480,000

 


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DATE ANSWERED

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