1. Assuming there were no inventory transactions between the companies, what balance for inventory should be reported in the consolidated balance sheet? a. P 0 b. P90,000 c. P120,000 d. P210,000 2. What amount did Baby pay to acquire Mommy? Was this amount equal to, greater than, or less than underlying book value? How do you know? a. P110,000; P30,000 greater than b. P110,000; P30,000 less than c. Zero; P30,000 less than d. Zero; P30,000 greater than
Problem 2
At December 31, 20x4, Baby Corporation acquired all of Mommy Enterprises’ common stock.
At that date, the book Values and fair values of Mommy’s identifiable assets and liabilities
were identical.
on January 1, 20x5, are as follows:
1. Assuming there were no inventory transactions between the companies, what balance for
inventory should be reported in the consolidated balance sheet?
a. P 0
b. P90,000
c. P120,000
d. P210,000
2. What amount did Baby pay to acquire Mommy? Was this amount equal to, greater than,
or less than underlying book value? How do you know?
a. P110,000; P30,000 greater than
b. P110,000; P30,000 less than
c. Zero; P30,000 less than
d. Zero; P30,000 greater than
3. Baby sold land it had purchased 12 years earlier for P10,000 to Mommy immediately after
it acquired Mommy. At what price did baby sell the land to Mommy?
a. P10,000
b. P15,000
c. P25,000
d. P40,000
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