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Based on the preceding information, what amount will be present in the revaluation capital account, when eliminating entries are prepared? A. $0

Based on the preceding information, what amount will be present in the revaluation capital account, when eliminating entries are prepared? A. $0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. Based on the preceding information, what amount will be present in the revaluation capital account, when eliminating entries are prepared?
A. $0
B. $65,000
C. $60,000
D. $15,000

2. Based on the preceding information, the write-up of buildings and equipment will:
A. increase Sirius's reported net income for 2009 by $5,000.
B. decrease Sirius's reported net income for 2009 by $5,000.
C. increase Sirius's reported net income for 2009 by $50,000.
D. have no affect on Sirius's reported net income for 2009.

On January 1, 2009, Wilton Company acquired all of Sirius Company's common shares, for $365,000 cash. On that date, Sirius's balance sheet appeared as follows: Assets Cash and Receivables $50,000 Inventory 80,000 Land 50,000 Buildings and Equipment(net) 200,000 Total Liabilities Current Payables Notes Payable Stockholders' Equity Common Stock Additional Capital Retained Earnings $380,000 Total $30,000 50,000 100,000 150,000 50,000 $380,000 The fair values of all of Sirius's assets and liabilities were equal to their book values except for inventory that had a fair value of $85,000, land that had a fair value of $60,000, and buildings and equipment that had a fair value of $250,000. Buildings and equipment have a remaining useful life of 10 years with zero salvage value. Wilton Company decided to employ push-down accounting for the acquisition. Subsequent to the combination, Sirius continued to operate as a separate company.
Transcribed Image Text:On January 1, 2009, Wilton Company acquired all of Sirius Company's common shares, for $365,000 cash. On that date, Sirius's balance sheet appeared as follows: Assets Cash and Receivables $50,000 Inventory 80,000 Land 50,000 Buildings and Equipment(net) 200,000 Total Liabilities Current Payables Notes Payable Stockholders' Equity Common Stock Additional Capital Retained Earnings $380,000 Total $30,000 50,000 100,000 150,000 50,000 $380,000 The fair values of all of Sirius's assets and liabilities were equal to their book values except for inventory that had a fair value of $85,000, land that had a fair value of $60,000, and buildings and equipment that had a fair value of $250,000. Buildings and equipment have a remaining useful life of 10 years with zero salvage value. Wilton Company decided to employ push-down accounting for the acquisition. Subsequent to the combination, Sirius continued to operate as a separate company.
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