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 of total retained earnings will be reported in the consolidated balance sheet for the year 2008?
A)$330,000
B)$450,000
C)$430,000
D)$370,000

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 of total retained earnings will be reported in the consolidated balance sheet for the year 2008?
A)$330,000 
B)$450,000 
C)$430,000 
D)$370,000

Quizplus · Accepted Answer

The consolidated retained earnings will be $330,000. This is because the retained earnings of the parent company ($200,000) will be combined with the retained earnings of the subsidiary company ($130,000).

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