Question

Pickup Company acquired 100 percent of the voting common shares of Sedan Corporation by issuing bonds...

Pickup Company acquired 100 percent of the voting common shares of Sedan Corporation by issuing bonds with a par value and fair value of $200,000. Immediately prior to the acquisition, Pickup reported total assets of $600,000, liabilities of $370,000, and stockholders’ equity of $230,000. At that date, Sedan reported total assets of $500,000, liabilities of $300,000, and stockholders’ equity of $200,000. Included in Sedan’s liabilities was an account payable to Pickup in the amount of $50,000, which Pickup included in its accounts receivable.

Based on the preceding information, what amount of total assets was reported in the consolidated balance sheet immediately after acquisition?

a) 600,000 b) 800,000 c) 1,050,000 d) 1,150,000

Based on the preceding information, what amount of total liabilities was reported in the consolidated balance sheet immediately after the acquisition?

a) 370,000 b) 670,000 c) 820,000 d) 870,000

Based on the preceding information, what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition?

a) 200,000 b) 230,000 c) 380,000 d) 430,000

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Answer #1

1. Based on the preceding information, what amount of total assets was reported in the consolidated balance sheet immediately after acquisition?

Answer is option C 1,050,000

(600,000 + 500,000 - 50000)

2. Based on the preceding information, what amount of total liabilities was reported in the consolidated balance sheet immediately after the acquisition?

Answer is option c) 820,000

(370000+300000+200000-50000)

Based on the preceding information, what amount of stockholders' equity was reported in the consolidated balance sheet immediately after acquisition?

Answer is option B 230,000

Only Pickup's shareholders equity will be recorded. L

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