On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Cash Accounts Receivable Pumpkin $ 50,000 70,000 Spice $ 15,000 25,000 Inventory 30,000 20,000 Land 150,000 80,000 Buildings and Equipment 250,000 200,000 Less: Accumulated Depreciation (70,000) (20,000) Investment in Spice Co. 210,000 Total Assets $690,000 $320,000 Accounts Payable $ 40,000 Bonds Payable 150,000 $ 10,000 40,000 Common Stock 300,000 90,000 200,000 180,000 $690,000 $320,000 Retained Earnings Total Liabilities and Equity At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. Based on the preceding information, what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?
On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Cash Accounts Receivable Pumpkin $ 50,000 70,000 Spice $ 15,000 25,000 Inventory 30,000 20,000 Land 150,000 80,000 Buildings and Equipment 250,000 200,000 Less: Accumulated Depreciation (70,000) (20,000) Investment in Spice Co. 210,000 Total Assets $690,000 $320,000 Accounts Payable $ 40,000 Bonds Payable 150,000 $ 10,000 40,000 Common Stock 300,000 90,000 200,000 180,000 $690,000 $320,000 Retained Earnings Total Liabilities and Equity At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000. Based on the preceding information, what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the business combination?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 20X6, Pumpkin Corporation acquired 70 percent of Spice Company's common stock for $210,000 cash. The
fair value of the noncontrolling interest at that date was determined to be $90,000. Data from the balance sheets of the
two companies included the following amounts as of the date of acquisition:
Cash
Accounts Receivable
Pumpkin
$ 50,000
70,000
Spice
$ 15,000
25,000
Inventory
30,000
20,000
Land
150,000
80,000
Buildings and Equipment
250,000
200,000
Less: Accumulated Depreciation
(70,000)
(20,000)
Investment in Spice Co.
210,000
Total Assets
$690,000
$320,000
Accounts Payable
$ 40,000
$ 10,000
Bonds Payable
150,000
40,000
300,000
90,000
Common Stock
Retained Earnings
Total Liabilities and Equity
200,000
180,000
$690,000
$320,000
At the date of the business combination, the book values of Spice's assets and liabilities approximated fair value except
for inventory, which had a fair value of $30,000, and land, which had a fair value of $95,000.
Based on the preceding information, what amount of total liabilities will be reported in the consolidated balance sheet prepared immediately after the
business combination?
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