On January 1, 2013, the Moody Company entered into a transaction for 100% of the

Question

On January 1, 2013, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To acquire these shares, Moody issued $400 in long-term liabilities and 40 shares of common stock having a par value of $1 per share but a fair value of $10 per share. Moody paid $20 to lawyers, accountants, and brokers for assistance in bringing about this acquisition. Another $15 was paid in connection with stock issuance costs. Prior to these transactions, the balance sheets for the two companies were as follows: Osorio S 40 180 280 360 440 100 (80) (400) Moody S 180 as Receivables Inventories 810 1,080 600 1,260 480 (450) (1,290) (330) an Buildings (net) Equipment (net) Accounts payable Long-term liabilities Common stock (S1 par) Common stock ($20 par) Additional paid-in capital Retained earnings (1,080) (1,260) (240) (340) (340) Note: Parentheses indicate a credit balance In Moody's appraisal of Osorio, three assets were deemed to be undervalued on the subsidiary's books: Inventory by $10, Land by $40, and Buildings by $60. Compute the amount of consolidated inventories at date of acquisition. O $1,080. O $290. O $1.370. O $1,350. O $1.360.

Explanation / Answer

Answer

1080 + 9.00 $

  

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