Plant Company acquired all of Sprout Corporation's stock on January 1,20X6 for $150,000 cash.On December 31,20X8,the trial balances of the two companies were as follows:
Sprout 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 31,20X8,Sprout owed Plant $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 20X8?
A)$330,000
B)$450,000
C)$430,000
D)$370,000

Question

Plant Company acquired all of Sprout Corporation's stock on January 1,20X6 for $150,000 cash.On December 31,20X8,the trial balances of the two companies were as follows:
  Sprout 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 31,20X8,Sprout owed Plant $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 20X8?
A)$330,000 
B)$450,000 
C)$430,000 
D)$370,000

Quizplus · Accepted Answer

The consolidated retained earnings will be $330,000, which is the sum of the individual retained earnings of the two companies.

Plant Company Acquired All of Sprout Corporation's Stock on January