Perry Company acquires 100% of the stock of Hurley on January 1, 2010, for $3,800 cash. As of that date Hurley has the following trial balance:
Net income and dividends reported by Hurley for 2010 and 2011 follow:
The fair value of Hurley’s net assets that differ from their book values are listed below:
Any excess of consideration transferred over fair value of net assets acquired is considered with an indefinite life. FIFO inventory valuation method is used.
1) Compute the consideration transferred in excess of book value acquired at January 1, 2012.
A. $150
B. $700
C. $2,200
D. $550
E. $2,900
2) Compute the amount of Hurley’s inventory that would be reported in a January 1, 2012, consolidated balance sheet.
A. $800
B. $100
C. $900
D. $150
E. $0
3) Compute the amount of Hurley’s buildings that would be reported in a December 31, 2012, consolidated balance sheet.
A. $1,560
B. $1,260
C. $1,440
D. $1,160
E. $1,140
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