Question

The separate condensed balance sheets of Patrick Corporation and its wholly owned subsidiary, Sean Corporation, are as follows: $ Sean 70,000 32,000 62,000 262,000 BALANCE SHEETS December 31, 2017 Patrick Cash 72,000 Accounts receivable (net) 140,000 Inventories 100,000 plant and equipment (net) 634,000 Investment in Sean 464,000 Total assets $ 1,410,000 Accounts payable 144,000 Long-term debt 112.000 Common stock ($10 par) 328,000 Additional paid-in capital Retained earnings 826,000 Total liabilities and shareholders $ 1,410,000 equity $426,000 96,000 34,00 68,000 14,000 214,000 $ 426,000 Additional Information: • On December 31, 2017, Patrick acquired 100 percent of Sean's voting stock in exchange for $464,000. • At the acquisition date, the fair values of Sean's assets and liabilities equaled their carrying amounts, respectively, except that the fair value of certain items in Sean's inventory were $26,000 more than their carrying amounts.

Answer 1

Answer :-

The correct answer is Option B - $ 1,154,000

Explanation :-

Total stockholders’ equity should be reported as follows -

Particular	Amount
Total liabilities and shareholders Equity of Patrick	$1,410,000
Less :- Account Payable	$144,000
Less :- Long term debt	$112,000
Total stockholders Equity	$1,154,000

Or if you add the common stock and Retained Earning of Patrick you will get same answer. In Stock Holder Equity ,we consider the common stock , additional paid up capital and Retained Earnings.