Condensed/Consolidated Balance Sheets
On January 1, 2001, Polk Corporation and Strass Corporation had condensed balance sheets as follows:
Polk StrassCurrent assets $70,000 $20,000
Noncurrent assets $90,000 $40,000
Total assets $160,000 $60,000
Current liabilities $30,000 $10,000
Long-term debt $50,000 ----
Stockholders’ equity $80,000 $50,000
Total liabilities and equities $160,000 $60,000
On January 2, 2001, Polk borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Strass. This debt is payable in 10 equal annual principal payments, plus interest, beginning December 31, 2001. The excess cost of the investment over the underlying book value of the acquired net assets is allocated to inventory (60%) and to goodwill (40%). On a consolidated balance sheet as of January 2, 2001,
Current assets should be: I hd chosen (b) for my answer $70K+20K+ (60K/10)
a. $99,000
b. $96,000
c. $90,000
d. $79,000
e. $70,000
Noncurrent assets should be: I Choose (a) ($90+40K)
a. $130,000
b. $134,000
c. $136,000
d. $140,000
e. $142,000
Current liabilities should be: I choose (c) ($30+10K)
a. $50,000
b. $46,000
c. $40,000
d. $30,000
e. $49,000
Noncurrent liabilities, including noncontrolling interest, should be: I choose (b)
a. $115,000
b. $109,000
c. $104,000
d. $55,000
e. $62,000
Stockholders’ equity should be: I choose (a)
a. $80,000
b. $85,000
c. $90,000
d. $130,000
e. $70,000
Is there someone out there that can confirm that I am right or not in giving this as my answer. And if not what is the correct answer. Thanks!
