Question

Pace Corporation acquired 100 percent of Spin Company's common stock on January 1, 20X9. Balance sheet data for the two companies immediately following the acquisition follows:

Item	Pace Corporation					Spin Company
Cash		$	30,000					$	25,000
Accounts Receivable			80,000						40,000
Inventory			150,000						55,000
Land			65,000						40,000
Buildings and Equipment			260,000						160,000
Less: Accumulated Depreciation			(120,000	)					(50,000	)
Investment in Spin Company Stock			150,000
Total Assets		$	615,000					$	270,000
Accounts Payable			$45,000						$33,000
Taxes Payable			20,000						8,000
Bonds Payable			200,000						100,000
Common Stock			50,000						20,000
Retained Earnings			300,000						109,000
Total Liabilities and Stockholders' Equity		$	615,000					$	270,000

At the date of the business combination, the book values of Spin's net assets and liabilities approximated fair value except for inventory, which had a fair value of $60,000, and land, which had a fair value of $50,000. The fair value of land for Pace Corporation was estimated at $80,000 immediately prior to the acquisition.

) Based on the preceding information, what amount of total assets will appear in the consolidated balance sheet prepared immediately after the business combination?

A) $756,000

B) $735,000

C) $750,000

D) $642,000

Answer: A

Please explain how to calculate this answer.

Answer 1

Step-1			Amount $
	Purchase Consideration		150,000
	Less: Net Assets Acquired
	Book Value (20,000 + 109,000 )	129,000
	Fair value in excess of Book value
	Inventory ( 60,000 - 55,000 )	5,000
	Land ( 50,000 - 40,000 )	10,000	144,000
	Goodwill		6,000
Step-2		Amount $
	Cash ( 30,000 + 25,000 )	55,000
	Accounts Receivable ( 80,000 + 40,000 )	120,000
	Inventory ( 150,000 + 60,000 )	210,000
	Land (65,000 + 50,000 )	115,000
	Building Equipment ( 260,000 + 160,000 )	420,000
	Less: Accumulated Depreciation	-170,000
	(120,000 + 50,000 )
	Goodwill	6,000
	Total Assets	756,000
		-