9)Presents Inc. acquired all of the outstanding common stock of Santa Co. on Jan
ID: 2608328 • Letter: 9
Question
9)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017. On that date, Presents had equipment with a book value of $500,000 and a fair value of $640,000. Santa had equipment with a book value of $350,000 and a fair value of $340,000. Immediately after the acquisition, what Equipment amount would appear on Santa's separate balance sheet and on Presents' consolidated balance sheet, respectively?
A. $350,000 and $850,000
B. $350,000 and $990,000
C. $340,000 and $500,000
D. $340,000 and $840,000
E. $340,000 and $980,000
10)Presents Inc. acquired all of the outstanding common stock of Santa Co. on January 1, 2017, for $257,000. Annual amortization of $19,000 resulted from this acquisition. Presents reported net income of $70,000 in 2017 and $50,000 in 2018 and paid $22,000 in dividends each year. Santa reported net income of $40,000 in 2017 and $47,000 in 2018 and paid $10,000 in dividends each year. What is the amount of consolidated net income for the year 2018?
A. $0.
B. $68,000.
C. $70,000.
D. $78,000.
E. $97,000.
Explanation / Answer
9. Correct option is 'E' i.e. $340,000 the amended value of fixed asset shall be shown in balance sheet of subsidiary company and for consolidated company $980,000 ($340,000 + $640,000) shall be shown as fixed amount.
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