Parent and Sub Inc

question 36

Multiple Choice

Parent and Sub Inc. had the following balance sheets on December 31, 2012: On January 1, 2013 Parent purchased all of Sub Inc.'s Common Shares for $40,000 in cash. On that date, Sub's Current Assets and Fixed Assets were worth $26,000 and $54,000, respectively. Assuming that Consolidated Financial Statements were prepared on that date, answer the following: The Fixed Assets of the combined entity should be valued at:

• A) $70,000.
• B) $120,000.
• C) $154,000.
• D) $160,000.

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Definitions:

Matching Hypothesis

The theory that individuals are more likely to form and succeed in relationships with others who are similarly attractive.

Altruism

The selfless concern for the well-being of others without the expectation of reward.

Popular

Being liked, admired, or supported by a large number of people or within a specific community or group.

Traits

Characteristic patterns of behavior, thought, or emotional experience that are relatively stable across time and situations.