On December 31,20X9,Pluto Company acquired 100 percent of Saturn Corporation's common stock for $300,000.Balance sheet information for Saturn just prior to the acquisition is given here:
At the date of the business combination,Saturn's net assets and liabilities approximated fair value except for inventory,which had a fair value of $60,000,land which had a fair value of $125,000,and buildings and equipment (net),which had a fair value of $250,000.
-Based on the information provided,what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?
A)$60,000
B)$75,000
C)$15,000
D)$45,000

Question

On December 31,20X9,Pluto Company acquired 100 percent of Saturn Corporation's common stock for $300,000.Balance sheet information for Saturn just prior to the acquisition is given here:
  At the date of the business combination,Saturn's net assets and liabilities approximated fair value except for inventory,which had a fair value of $60,000,land which had a fair value of $125,000,and buildings and equipment (net),which had a fair value of $250,000.
-Based on the information provided,what amount of inventory will be included in the consolidated balance sheet immediately following the acquisition?
A)$60,000 
B)$75,000 
C)$15,000 
D)$45,000

Quizplus · Accepted Answer

When Pluto Company acquired Saturn Corporation's common stock, they paid $300,000. Prior to the acquisition, Saturn's inventory had a fair value of $60,000. Therefore, after the acquisition, the inventory will be recorded on the consolidated balance sheet at the fair value of $60,000. Hence, the correct choice is A) $60,000.

On December 31,20X9,Pluto Company Acquired 100 Percent of Saturn Corporation's