Use the following information to answer the question(s) below.

On January 1, 2014, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities:

$\begin{array}{lll}
&\text {Book Value}&\text {Fair Value}\
\text { Cash } & \$ 10,000 & \$ 10,000 \
\text { Accounts Receivable } & 30,000 & 35,000 \
\text { Inventory } & 40,000 & 50,000 \
\text { Plant Assets } & \underline{60,000} & \underline{80,000} \
\text { Total Assets } & \underline{ \$ 140,000 }& \underline{\$ 175,000}
\end{array}$
$$\begin{array} { l l }
\text { Liabilities } & \$ 25,000 &\$25,000\
\text { Capital Stock } & 100,000 \
\text { Retained Earnings } & 15,000
\end{array}$$ Push-down accounting is used for the acquisition.
-Assume the parent company theory is used.On January 2,2014,Leah Company will report Goodwill of ________ and Accounts Receivable of ________ on Leah's balance sheet.

Question

Use the following information to answer the question(s) below.

On January 1, 2014, Penelope Company acquired a 90% interest in Leah Company for $180,000 cash. On January 1, 2014, Leah Company had the following assets and liabilities:

$\begin{array}{lll}
&\text {Book Value}&\text {Fair Value}\
\text { Cash } & \$ 10,000 & \$ 10,000 \
\text { Accounts Receivable } & 30,000 & 35,000 \
\text { Inventory } & 40,000 & 50,000 \
\text { Plant Assets } & \underline{60,000} & \underline{80,000} \
\text { Total Assets } & \underline{ \$ 140,000 }&  \underline{\$ 175,000}
\end{array}$
 $$\begin{array} { l l } 
\text { Liabilities } & \$ 25,000 &\$25,000\
\text { Capital Stock } & 100,000 \
\text { Retained Earnings } & 15,000
\end{array}$$ Push-down accounting is used for the acquisition.
-Assume the parent company theory is used.On January 2,2014,Leah Company will report Goodwill of ________ and Accounts Receivable of ________ on Leah's balance sheet.

Quizplus · Accepted Answer

Based on the parent company theory, the goodwill and accounts receivable of the subsidiary should be consolidated with those of the parent company. 
From the given records: 
- Goodwill of 11ea84d4_86bd_0900_83dc_bf50347955de_TB3014_00_TB3014_00 is $2,500 
- Accounts receivable of 11ea84d4_86bc_e1ef_83dc_5b7249921d8f_TB3014_00_TB3014_00 is $17,000 
- Accounts receivable of 11ea84d4_86bc_e1ee_83dc_fd4c1ef23864_TB3014_00_TB3014_00 is $17,000

Thus, the total goodwill = $2,500 
And the total accounts receivable = $17,000 + $17,000 = $34,000

Therefore, the closest answer choice is D with a goodwill of $30,500 and accounts receivable of $34,500.

Use the Following Information to Answer the Question(s) Below