Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 2012. Balance sheet data for the two companies immediately following the acquisition follow: Power Silk Item Corporation Corporation Assets Cash $ 44,000 $ 30,000 Accounts Receivable 110,000 45,000 Inventory 130,000 70,000 Land 80,000 25,000 Buildings and Equipment 500,000 400,000 Less: Accumulated Depreciation (223,000) (165,000) Investment in Silk Corporation Stock 150,500 Total Assets $ 791,500 $ 405,000 Liabilities and Stockholders’ Equity Accounts Payable $ 61,500 $ 28,000 Taxes Payable 95,000 37,000 Bonds Payable 280,000 200,000 Common Stock 150,000 50,000 Retained Earnings 205,000 90,000 Total Liabilities and Stockholders’ Equity $ 791,500 $ 405,000 At the date of the business combination, the book values of Silk’s net assets and liabilities appro1imated fair value except for inventory, which had a fair value of $85,000, and land, which had a fair value of $45,000. The fair value of the

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Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 2012

Accounting Mar 06, 2021

Power Corporation acquired 70 percent of Silk Corporation’s common stock on December 31, 2012. Balance sheet data for the two companies immediately following the acquisition follow:

	Power		Silk
Item	Corporation		Corporation
Assets
Cash	$	44,000	$	30,000
Accounts Receivable		110,000		45,000
Inventory		130,000		70,000
Land		80,000		25,000
Buildings and Equipment		500,000		400,000
Less: Accumulated Depreciation		(223,000)		(165,000)
Investment in Silk Corporation Stock		150,500

Total Assets	$	791,500	$	405,000

Liabilities and Stockholders’ Equity
Accounts Payable	$	61,500	$	28,000
Taxes Payable		95,000		37,000
Bonds Payable		280,000		200,000
Common Stock		150,000		50,000
Retained Earnings		205,000		90,000

Total Liabilities and Stockholders’ Equity	$	791,500	$	405,000

At the date of the business combination, the book values of Silk’s net assets and liabilities appro1imated fair value except for inventory, which had a fair value of $85,000, and land, which had a fair value of $45,000. The fair value of the noncontrolling interest was $64,500 on December 31, 2012.

For each question below, indicate the appropriate total that should appear in the consolidated balance sheet prepared immediately after the business combination.

1.What amount of inventory will be reported?

2. What amount of goodwill will be reported?

3.What amount of total assets will be reported?

4. What amount of total liabilities will be reported?

5. What amount will be reported as noncontrolling interest?

6. What amount of consolidated retained earnings will be reported?

7. What amount of total stockholders’ equity will be reported?

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