Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 20X1. The book value and fair value of Vicker's accounts on that date (prior to creating the combination) follow, along with the book value of Bullen's accounts: Assume that Bullen issued preferred stock with a par value of $240,000 and a fair value of $500,000 for all of the outstanding shares of Vicker in an acquisition business combination. What will be the balance in the consolidated Inventory and Land accounts?

Question

Bullen Inc. acquired 100% of the voting common stock of Vicker Inc. on January 1, 20X1. The book value and fair value of Vicker's accounts on that date (prior to creating the combination) follow, along with the book value of Bullen's accounts:  Assume that Bullen issued preferred stock with a par value of $240,000 and a fair value of $500,000 for all of the outstanding shares of Vicker in an acquisition business combination. What will be the balance in the consolidated Inventory and Land accounts?

Quizplus · Accepted Answer

To find the consolidated balances, we need to add up the corresponding accounts of both companies:

- Inventory: 
  - Bullen's inventory balance: $440,000 
  - Vicker's inventory balance: $56,000 
  - Total inventory balance: $496,000

- Land: 
  - Bullen's land balance: $400,000 
  - Vicker's land balance: $120,000 
  - Total land balance: $520,000

Note that the preferred stock issued by Bullen is not relevant for calculating the consolidated balances of inventory and land.