On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
-Based on the preceding information,what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?
A)$445,000
B)$205,000
C)$565,000
D)$550,000

Question

On January 1,20X9,Pirate Corporation acquired 80 percent of Sea-Gull Company's common stock for $160,000 cash.The fair value of the noncontrolling interest at that date was determined to be $40,000.Data from the balance sheets of the two companies included the following amounts as of the date of acquisition:
  At the date of the business combination,the book values of Sea-Gull's net assets and liabilities approximated fair value except for inventory,which had a fair value of $45,000,and land,which had a fair value of $60,000.
-Based on the preceding information,what amount will be reported as total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination?
A)$445,000 
B)$205,000 
C)$565,000 
D)$550,000

Quizplus · Accepted Answer

The total stockholders' equity in the consolidated balance sheet prepared immediately after the business combination will be $445,000. This is because the parent company's stockholders' equity of $205,000 will be combined with the subsidiary's stockholders' equity of $240,000.

On January 1,20X9,Pirate Corporation Acquired 80 Percent of Sea-Gull Company's