Lea Company acquired all of Tenzing Corporation's stock on January 1,2006 for $150,000 cash.On December 31,2008,the trial balances of the two companies were as follows:
Tenzing Corporation reported retained earnings of $75,000 at the date of acquisition.The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of five years from the date of acquisition.At December 31,2008,Tenzing owed Lea $4,000 for services provided.

-Based on the preceding information,what amount will be reported for total accounts payable in the consolidated balance sheet for the year 2008?
A)$56,000
B)$46,000
C)$60,000
D)$42,000

Question

Lea Company acquired all of Tenzing Corporation's stock on January 1,2006 for $150,000 cash.On December 31,2008,the trial balances of the two companies were as follows:
Tenzing Corporation reported retained earnings of $75,000 at the date of acquisition.The difference between the acquisition price and underlying book value is assigned to buildings and equipment with a remaining economic life of five years from the date of acquisition.At December 31,2008,Tenzing owed Lea $4,000 for services provided.
 
-Based on the preceding information,what amount will be reported for total accounts payable in the consolidated balance sheet for the year 2008?
A)$56,000 
B)$46,000 
C)$60,000 
D)$42,000

Quizplus · Accepted Answer

The consolidated balance sheet will report $56,000 for total accounts payable in 2008. This is because the accounts payable of the parent company ($40,000) and the accounts payable of the subsidiary company ($16,000) are combined in the consolidation process.

Lea Company Acquired All of Tenzing Corporation's Stock on January