ACQ co acquired 100% of ownership SUB co by paying 100,000 cash. After acquisiti
ID: 2392455 • Letter: A
Question
ACQ co acquired 100% of ownership SUB co by paying 100,000 cash. After acquisition, the balance sheet of ACQ 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 the SUB co 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 Stockholders' Equity in the consolidated Balance sheet for ACQ Co reflecting the acquisition of SUB Co? Put your answer without comma or dollar sign.
Explanation / Answer
The Stockholder's equity in the consolidated balance sheet will be 100000.
Explanation:
Total assets in consolidated balance sheet (as described earlier):
Current assets: 60000
PP&E: 100,000
Goodwill: 60,000
Total assets: 220,000
Less: Total liabilities 120,000
(100,000+20000)
Therefore, Stockholder's equity in consolidated Balance Sheet is $ 100,000 (i.e. 220,000 - 120,000)
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