Company A acquired 100% of ownership Company B by paying 100,000 cash. After acq

ID: 2392354 • Letter: C

Question

Company A acquired 100% of ownership Company B by paying 100,000 cash. After acquisition, the balance sheet of Company A reported as follows:

Current Assets $30,000

Investment $100,000

PP&E $70,000

Total Assets $200,000

Liabilities $100,000

Shareholders' Equity $100,000

The Fair value of Company B was reported as the following

Current Assets $30,000

PP&E $30,000

Total Assets $60,000

Liabilities $20,000

Shareholders' Equity $40,000

How much of will be recorded as total asset in the consolidated Balance sheet for Company A reflecting the acquisition of Company B?

The total assets that will be recorded in the consolidated balancesheet for company A is:-

Current Assets -$ 60000 (30000+30000)

PP& E -$ 100000(70000+30000)

Total Assets -$ 160000

Investments will not be included in total assets while consolidation as it is the investment made in the Subsidiary company by holding company.

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