Jackson Company acquires 100% of the stock of Clark Corporat…

Jackson Company acquires 100% of the stock of Clark Corporation on January 1, 2020, for $4,100 cash. As of that date Clark has the following trial balance:     Debit   Credit Cash $ 500           Accounts receivable   600           Inventory   900           Buildings (net) (5 year life)   1,600           Equipment (net) (2 year life)   1,000           Land   900           Accounts payable         $ 400   Long-term liabilities (due 12/31/22)           1,900   Common stock           1,000   Additional paid-in capital           700   Retained earnings           1,500   Total $ 5,500     $ 5,500     Net income and dividends reported by Clark for 2020 and 2021 follow:     2020 2021 Net income $ 120   $ 140   Dividends   40     50     The fair value of Clark’s net assets that differ from their book values are listed below:     Fair Value Buildings $ 1,200   Equipment   1,350   Land   1,300   Long-term liabilities   1,750     Any excess of consideration transferred over fair value of net assets acquired is considered goodwill with an indefinite life. Compute the amount of Clark’s equipment that would be reported in a December 31, 2020, consolidated balance sheet.                         A)    $825.                   B)    $1,000.            C)    $1,175.            D)    $1,350.            E)    $1,525.

On January 1, 2021, the Moody Company entered into a transac…

On January 1, 2021, 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 also issued 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:     Moody   Osorio Cash $ 180     $ 40   Receivables   810       180   Inventories   1,080       280   Land   600       360   Buildings (net)   1,260       440   Equipment (net)   480       100   Accounts payable   (450 )     (80 ) Long-term liabilities   (1,290 )     (400 ) Common stock ($1 par)   (330 )         Common stock ($20 par)           (240 ) Additional paid-in capital   (1,080 )     (340 ) Retained earnings   (1,260 )     (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.If Osorio retains a separate corporate existence, what amount was recorded as the investment in Osorio?                         A)    $400.                   B)    $440.            C)    $800.            D)    $820.            E)    $835.

Presented below are the financial balances for the Boxwood C…

Presented below are the financial balances for the Boxwood Company and the Tranz Company as of December 31, 2020, immediately before Boxwood acquired Tranz. Also included are the fair values for Tranz Company’s net assets at that date (all amounts in thousands).     Boxwood Tranz Co. Tranz Co. Book Value Book Value Fair Value   12/31/20 12/31/20 12/31/20 Cash $ 870     $ 240     $ 240   Receivables   660       600       600   Inventory   1,230       420       580   Land   1,800       260       250   Buildings (net)   1,800       540       650   Equipment (net)   660       380       400   Accounts payable   (570 )     (240 )     (240 ) Accrued expenses   (270 )     (60 )     (60 ) Long-term liabilities   (2,700 )     (1,020 )     (1,120 ) Common stock ($20 par)   (1,980 )                 Common stock ($5 par)           (420 )         Additional paid-in capital   (210 )     (180 )         Retained earnings   (1,170 )     (480 )         Revenues   (2,880 )     (660 )         Expenses   2,760       620             Note: Parenthesis indicate a credit balanceAssume a business combination took place at December 31, 2020. Boxwood issued 50 shares of its common stock with a fair value of $35 per share for all of the outstanding common shares of Tranz. Stock issuance costs of $15 (in thousands) and direct costs of $10 (in thousands) were paid to effect this acquisition transaction. To settle a difference of opinion regarding Tranz’s fair value, Boxwood promises to pay an additional $5.2 (in thousands) to the former owners if Tranz’s earnings exceed a certain sum during the next year. Given the probability of the required contingency payment and utilizing a 4% discount rate, the expected present value of the contingency is $5 (in thousands). Compute consolidated inventory immediately following the acquisition.                         A)    $1,650.                B)    $1,810.            C)    $1,230.            D)    $580.            E)    $1,830.