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Green Company: Reported Inventory, Balance Sheet

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Green Company purchased 100 percent of the common shares of White Company for $880,000. Selected accounts from Green's balance sheet at the date of combination are as follows: Inventory $720,000 Buildings and Equipment (net) 1,000,000 Common Stock 840,000 Retained Earnings 1,100,000 Selected accounts from the balance sheet of White at acquisition are as follows: Inventory $240,000 Buildings and Equipment (net) 880,000 Common Stock 350,000 Additional Paid-in Capital 450,000 Retained Earnings (60,000) On the date of purchase, White inventory and buildings and equipment had fair values of $280,000 and $860,000, respectively.

1. Based on the information given above, the amount to be reported for inventory in the consolidated balance sheet immediately after the combination is:
$1,000,000.
$960,000.
$760,000.
$720,000.

2. Based on the information given above, the amount to be reported in the consolidated balance sheet for buildings and equipment (net) immediately after the combination is:
$1,880,000.
$1,860,000.
$1,800,000.
$1,000,000.

3. Based on the information given above, the amount to be reported in the consolidated balance sheet for the investment in White Company common stock is:
$0.
$350,000.
$740,000.
$880,000.

4. Based on the information given above, the balance to be reported as goodwill in the consolidated balance sheet prepared immediately after the combination is:
$0.
$600,000.
$120,000.
$140,000.

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Solution Preview

1. Based on the information given above, the amount to be reported for inventory in the consolidated balance sheet immediately after the combination is:

Guidance:
Green Company inventory, at book value $720,000 plus White Company inventory at fair value $$280,000 = $1,000,000

2. Based on the information given above, the amount to be ...

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