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 will be included as Investment in Saturn Corporation in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$395,000
C)$255,000
D)$300,000

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 will be included as Investment in Saturn Corporation in the consolidated balance sheet immediately following the acquisition?
A)$0 
B)$395,000 
C)$255,000 
D)$300,000

Quizplus · Accepted Answer

In a consolidated balance sheet, the investment in the subsidiary is eliminated and replaced by the subsidiary's assets and liabilities. Therefore, the investment amount is $0.

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