Question

Pickup Company acquired 100 percent of the voting common shares of Sedan Corporation by issuing bonds with a par value and fair value of $200,000. Immediately prior to the acquisition, Pickup reported total assets of $600,000, liabilities of $370,000, and stockholders’ equity of $230,000. At that date, Sedan reported total assets of $500,000, liabilities of $300,000, and stockholders’ equity of $200,000. Included in Sedan’s liabilities was an account payable to Pickup in the amount of $50,000, which Pickup included in its accounts receivable.

Based on the preceding information, what amount of total assets did Pickup report in its balance sheet immediately after the acquisition?
a. 1,100,000
b. 1,000,000
c. 800,000
d. 1,600,000

Answer 1

c. $800,000

Step-by-step explanation:

Relevant data provided

Beta reported total assets = $600,000

Fair value of investment = $200,000

The computation of total assets is shown below:-

Total assets did beta report = Beta reported total assets + Fair value of investment

= $600,000 + $200,000

= $800,000

Therefore for computing the total assets did beta report we simply added the beta reported total assets with fair value of investment.